From The Financial Times

US investors pulled record amounts of money from mutual funds last month - nearly trebling the previous mark set during September 2001 - as they rushed to cash amid market turmoil.

By the close of business on Monday, investors had withdrawn $74.5bn during September, including $50.5bn from equity mutual funds and $24bn from bond funds, according to TrimTabs. In the eight months to the end of August, the funds had attracted total net inflows of $20bn.

Big outflows were under way before Monday's stock market meltdown. On Monday alone, however, investors pulled close to $10bn from equity funds.

Money market funds, which have traditionally been a beneficiary of mutual fund outflows, saw net outflows of $10bn on Monday, indicating that investors remain extremely jittery.

"Money is leaving the stock market and money market funds for the equivalent of the mattress, seeking safety in Treasuries and accounts in strong banks," said Charles Biderman, chief executive of TrimTabs. "Individuals are scared and have no confidence in our system and in whether our leaders know what they are doing." ...

The big outflows from equity funds are likely to exacerbate the decline of the stock market, because fund managers will be under pressure to sell stocks to meet redemptions. Almost all mutual fund groups have seen a drop in assets in the year to August, according to Financial Research Corporation.

Mr Biderman said: "There is a huge amount of sideline cash that wants to return to the stock market. What's necessary for that to happen is a return of confidence in the system."

The previous record outflow from mutual funds was in September 2001, when investors pulled $27bn.