The public's faith in mutuals as an investment vehicle has apparently not been restored. Total assets under the mutual funds' management shrank 9.6% in July 2002, as the public withdrew NIS 5.4 billion from all mutuals, according to the Meitav brokerage house.

Total assets under management shrank to NIS 51.1 billion in July, from NIS 56.1 billion in June.

For the first time, the public also withdrew money from mutuals that specialize in investment abroad, Meitav reports. Redemptions from these funds reached NIS 1.2 billion.

Of that sum, a billion shekels was taken out of funds that specialize in foreign bonds. Those funds had attained considerable popularity in early 2002, raising some NIS 4 billion during the first half of the year.

Shekel-based mutuals crashed, losing NIS 1.1 billion in July despite the shekel's recovery in June.

During the first 7 months of 2002, the total assets under the funds' management dropped by 19.3%, for two reasons: one is the money the public took back, the other is that the funds posted an average negative yield of 3%.

But that naked figure fails to capture the real picture, which is: During the first months of the year, the public invested some NIS 15 billion in mutuals, after the Bank of Israel's 2% rate cut in December 2001.

In the subsequent months, the public withdrew NIS 25 billion as inflation climbed and bond yields plunged.

From the beginning of the year, only two kinds of funds could boast net accrual: funds investing abroad accrued NIS 3.6 billion, and funds specializing in government bonds accrued NIS 0.8 billion. All other kinds of mutuals saw net withdrawals.