Investors pulled a net total of $321.4 billion from equities and bond funds last year according to EPFR Global, a US-based firm that tracks the fund flows and asset allocations of more than 15,000 equities, fixed-income, and hedge funds domiciled globally with $11 trillion in total assets.

Excluding inflows from exchange traded funds (ETFs) û which tend to perform extraordinarily well in down markets û the total net outflows from all non-ETF related equities and bond funds totalled $475.6 billion last year.

Equities funds worldwide suffered $232.1 billion in net outflows, a sharp contrast to the $66.5 billion in inflows in 2007, according to EPFR Global, which tracks more than $10 trillion in assets in traditional and alternative funds.

All equities fund groups tracked by EPFR Global posted net outflows last year. Global equities funds led the exodus last year, with net redemptions of $79.4 billion, followed by European and US equities funds with net outflows of $58 billion and $27.1 billion, respectively.

ôThe decoupling theme that took hold in the last quarter of 2007, of investors moving money from developed market funds and putting it into emerging market funds, came to an abrupt halt in early in 2008,ö says Brad Durham, Massachusetts-based EPFR Global managing director.

ôIn 2008, as the fear and panic in global markets deepened, investors took from most equities and bond funds and stuck it in cash or cash equivalents such as the money market funds,ö Durham says.

ôThe question for 2009 is whether credit markets will continue to thaw and whether all of the fiscal stimulus to come and the expectation of a recovery in economic activity later this year will be enough to coax some of the cash back into equities and bond exposure. On this score, December fund flows and market performances were encouraging,ö he adds.

Data in December showed the continued return of risk appetite, with high-yield bond funds ending the year with five straight weeks of net inflows and all emerging market equities funds turning in $1.6 billion in net inflows.

In a year where cash was king, money market funds ended 2008 with $455.4 billion in net inflows, adding to $216.4 billion in net inflows in 2007. US bond funds also ended on a positive note, with net inflows of $3.4 billion last year. Emerging market, global and high-yield bond funds ended the year with net outflows.

Although global emerging market equities funds looked promising towards the end of last year, they still ended with $10.3 billion in net outflows as investors lost faith in the so-called decoupling of the developed and emerging economies.

Funds focused on emerging Asia were the first to feel the effects of this shift in sentiment. Investors fretted that policymakers in the region would struggle to reconcile their long-standing preference for competitive currencies to boost exports with the steps needed to get ahead of inflationary expectations fuelled by high commodity prices. Late last year, Asia ex-Japan equities funds began to see trickles of new money as commodity prices fell and ChinaÆs government unveiled a $590 billion stimulus package in an effort to keep GDP growth above 8%.

Falling commodity prices, plus higher risk aversion and a general unwillingness to lend, put funds focused on Latin America and the Europe, Middle East and Africa (EMEA) region in the spotlight. EMEA equities funds ended last year with $6.2 billion in net outflows as their exposure to markets with big current account deficits (Hungary, Egypt, Turkey, the Baltic Republics), a high dependence on commodity exports (Russia) or both (South Africa) kept investors on edge.

Among emerging market country and specialty funds, China equities funds bucked the trend. In contrast to last year and the first half of 2008, investors ended the year having opted decisively for direct exposure to ChinaÆs still impressive GDP growth. That benefited China equities funds at the expense of Greater China equities funds (which also invest in Hong Kong and Taiwan), Brazil, Russia, India and China (BRIC) equities funds, India equities funds, and Korea equities funds. Taiwan equities funds had a stellar first half of 2008 on hopes for economic and political reforms following the presidential election, but finished the year with outflows in 24 of the final 25 weeks of the year.

US equities funds continued to benefit from the search for safety and the revival of the home market bias in late December. They took in another $20.2 billion in net inflows during December, extending their winning run from the beginning of November to more than $27 billion of net inflows.

In December, Japan equities funds posted inflows for only the second time in 55 weeks in late April and putting together a 10-week inflow streak running into July. But hopes that inflation would chase domestic savings into Japanese equities, that Japanese corporate profits would hold up because of their experience in dealing with high energy prices and faith in the relative health of JapanÆs banking system evaporated as oil prices fell.