The books are closed on 2001, and the accounting is both positive and negative. Overall, 2001 was a record year for cash flows into funds, according to Reuters' Lipper Analytics. The bad news was three of every four dollars went to money funds. Equity funds took in only $33.6 billion, the least of any asset class. The result is a shift in the industry from high margin equity products to low and no margin money funds.

Asset Class	12/01	2001
Equity	1.7	33.6
Fixed Income	-0.9	75.6
Money Market	-28.4	325.3
TOTAL	-27.6	434.5

Value funds also failed to pick up the slack created by the decline in growth fund sales. Growth fund flows fell nearly $190 billion. These funds took in some $210 billion in 2000 but saw net redemptions of more than $22 billion in 2001. Meanwhile, value funds pulled in a net $62.6 billion in 2001, nearly a $100 billion turnaround from outflows of $37.3 billion in 2000.

Based on the theory that product development follows cash flows, look for new funds in the value, small/mid-cap, balanced, real estate, and equity income flavors.

The buildup in money funds does hold out the hope that these assets will eventually make the shift into equity funds at some point in the future. Early evidence, though, warns that fund executives should not hold their breath for fear of turning blue.

December flows slipped into negative territory despite a year end runup in the stock market. Even worse, money fund flows for the month also turned negative during the year's final month for the first time since 1998. Last month saw $28 billion exit money funds compared to inflows of $20 billion each of the past two years and an outflow of $8.7 billion in 1998. 

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