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MONEY SMALL INVESTOR INDEX: INVESTORS FLOCK INTO MUNI FUNDS

 MONEY SMALL INVESTOR INDEX: INVESTORS FLOCK INTO MUNI FUNDS
 /ADVANCE/ NEW YORK, Sept. 6 /PRNewswire/ -- Safety-conscious small


investors looking for higher yields than the 3 percent offered by money funds have socked $1.5 billion into intermediate-term tax-free bond funds over the past three months, according to data gathered for Money magazine's Small Investor Index.
 The funds, which currently yield an average of 5.3 percent, offer a bonus because the interest they pay is exempt from federal income tax. That makes their yield equivalent to a 7.7 percent taxable payout for an investor in the 31 percent federal tax bracket.
 Intermediate-term funds, which buy mostly bonds that mature in less than 10 years, are also safer than funds that hold volatile long-term issues, whose prices are prone to sharp price swings.
 Major fund companies report that intermediate-term munis are one of the hottest bond fund groups. For example, the $541 million Scudder Medium Term Tax-Free Fund, with a six-year average maturity and a 5.4 percent yield, has taken in $73 million in the past three months. That compares with just $48 million for the same period a year ago and with a net outflow of $2 million for Scudder's Managed Municipal Bond Fund, which yields a slightly higher 6 percent but has a 12-year maturity.
 Bond market analysts think investors are being correctly cautious by sticking with shorter-maturity funds. "Income-oriented investors should not reach for the extra yield of a long-term fund," says Gerald Guild, manager of the fixed income department at Advest, a brokerage in New York City. "When rates eventually rise, the long-term fundUs price will fall sharply."
 Last week, the Small Investor Index, which tracks the average individual's portfolio, rose $347 to $45,707. Stocks gained $217, while bonds added $119. CDs and money funds contributed $11.
 This Last Year % Change from a
 Week Week Ago Week Ago Year Ago
 104.30 103.51 96.21 +0.76% +8.42%
 Latest Changes for Each Asset
 % Change from a
 Category Index Week Ago Year Ago
 Stocks:
 NYSE 105.40 +1.15% +10.73%
 ASE/OTC 102.79 +2.06 +11.21
 Equity funds 103.99 +1.36 +9.36
 Bonds:
 Taxable bonds 106.64 +0.49 +13.31
 Municipals 107.33 +2.35 +11.87
 Bond funds 106.63 +0.69 +12.29
 Cash:
 CDs 103.01 +0.07 +4.71
 Money funds 102.40 +0.06 +3.87
 Other:
 Real estate 93.90 -0.13 -8.75
 Gold 91.69 +0.37 -6.31
 Dec. 27, 1991 equals 100
 Where Average Small Investors Have Their Money Now
 Current Year Ago Current Year Ago
 NYSE 22.21% 21.78% Bond funds 6.21% 4.91%
 ASE/OTC 7.01 6.88 CDs 15.13 18.59
 Equity funds 5.80 4.54 Money funds 23.91 22.50
 Taxable bonds 11.52 12.22 Real estate 0.78 0.78
 Municipals 6.91 7.25 Gold 0.52 0.55
 Sources: Bank Rate Monitor, IBC/Donoghue's Money Fund Report, the Federal Reserve, Investment Company Institute, Lehman Bros., Lipper Analytical Services, Merrill Lynch, Morgan Stanley Capital International, National Association of Real Estate Investment Trusts, Prudential Asset Management, Standard & Poor's, Robert Stanger & Co., World Gold Council.
 -0- 9/7/92
 /NOTE TO EDITORS: This material is also available in printable form from AP GraphicsNet and Access services for graphics and tables (under the file name MoneyIndex) and from PR Newswire for full text./
 /CONTACT: Jordan Goodman of MONEY, 212-522-3618, or Patti Straus of MONEY public relations, 212-522-2695/ CO: ST: IN: SU: ECO


GK -- NY038 -- 6966 09/04/92 13:43 EDT
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