Last week, when the Standard & Poor’s 500 index fell nearly 4%, investors pulled a net $2.7 billion out of domestic stock mutual funds, according to estimates by Trim Tabs Financial Services, a Santa Rosa, Calif., firm that tracks fund flows.

But what looks like a big number isn’t, relatively speaking. On a percentage basis, that $2.7 billion is a fraction of the net $31.5 billion in cash that Trim Tabs estimates has flowed into domestic equity portfolios in June and July.

As has been typical during periods of sharp market drops in recent years, mutual fund companies say most investors appear unfazed by the market’s latest downturn.

Indeed, at Vanguard Group, spokesman Brian Mattes said more cash flowed into stock funds than out Tuesday, as stock prices fell broadly again.


What’s more, Vanguard didn’t need to call on its “Swiss Army,” a group of 1,000 or so Vanguard employees--from portfolio managers to analysts to attorneys--trained to assist phone representatives in emergencies.

Baltimore-based T. Rowe Price Associates said it saw “modest redemptions” in domestic equity funds last week. However, the firm says net cash flows into its domestic equity funds this month should still top May and June totals.

T. Rowe added that no calls had to be placed on hold Tuesday, an indication that investor call volume was normal. Fidelity Investments actually reported fewer calls Tuesday than normal.

Last week’s redemptions are most likely attributable to the actions of a small group of market timers, not the broad universe of retail investors, said Alan Skrainka, chief market strategist for brokerage Edward Jones in St. Louis.


Financial planner Harold Evensky of Coral Gables, Fla., agrees. “The average investor today sees this volatility as background noise.

“Since 1987, most people have gotten used to volatility,” he added. “Now, if there’s a big correction, people call it a buying opportunity.”

But like many other investment pros, he questions whether people will show that same discipline if the market falls, then fails to recover quickly.