My Comments: Several of my clients have been asking how come their accounts didn’t grow by 10% in the first quarter. As they received their quarterly statements, what they saw did not agree with what they heard on TV. Namely that the bad times were over, the DOW and S&P500 were up and running, and how come that outcome didn’t show up on their statements?

My answer is that we are not out of the woods, that housing and unemployment and Europe and the slowing of the Chinese economy are still very influential in how 2012 and indeed, how 2013 is going to play out. Not to mention the uncertainty associated with the election of a president for the next four years.

Then along comes this article, the source of which I failed to note, that suggests a lot of people are taking money off the table. And the inevitable question surfaces; where is it going? Into cash until there is a better understanding of how the next several months are likely to play out. So my advice is to be patient, be defensive, and position yourself to take advantage of opportunities as they arise.

By Warren S. Hersch

Net inflows into stocks and bond funds by U.S. mutual fund investors dipped 71% in March, new research reveals.

Strategic Insight, Arlington, Va., reports that U.S. mutual fund investors “cautiously” funneled an estimated $13 billion in net inflows into stock and bond funds during March 2012 (open-end and closed-end mutual funds, excluding ETFs and funds underlying variable annuities) That marks a sharp drop from February, when investors put a net $46 billion in flows into long-term funds.

Aggregate equity mutual fund flows were a negative $2 billion in March. This was offset by net inflows of about $15 billion into bond funds, which the report notes are seen as less risky.

In total, long-term mutual funds experienced $96 billion of net inflows in 2012’s first quarter, a significant improvement over the previous quarter, which saw $23 billion in net outflows from long-term funds. The total was also up from the $87 billion in net inflows in the first quarter of 2011.

In March, domestic equity funds ended their two-month streak of net inflows by posting net outflows of $7.5 billion, the report says. The net outflows occurred despite another month of positive stock market returns.

The average U.S. equity fund gained 2% on an asset-weighted basis in March. And the S&P 500 Index generated a 12.6% total return in the first quarter of 2012 (the index’s best first quarter since 1998).

International and global equity funds saw net inflows of just over $5 billion in March, led by flows into global allocation and diversified emerging markets stock funds.

“Investor confidence remains fragile, as evidenced by the swift downturn in U.S. equity fund flows after two months of modest inflows,” says Avi Nachmany, SI’s director of research. “The optimism on Wall Street has yet to reach Main Street.

“There is no shortage of issues to worry about, including the economy, rising gasoline prices, and geopolitical tensions,” he adds. “So we expect investors to continue to be cautious; and the near term may prove more favorable for bond funds than stock funds.”