Shifting investments strategy from equity funds to money market funds – the case of Romanian open - end fund market during the financial crisis

Mutual funds are one of the key suppliers of liquidity in Romanian capital market. This paper uses quarterly data on Romanian open-end funds starting with 2006 until 2010. We find that significant negative flows (outflows) were registered beginning with the end of 2007 (equity funds), during 2008 (equity funds, balanced funds, other funds and bond funds in the last 2 quarters of the year) and from 2009 to 2010 (in the case of money market funds). There is evidence that the changing market conditions attract differently the incoming flows in these mutual funds. This is the reason why such perturbations affect investors’ confidence for these investment vehicles and impose the reorientation of the investment funds and of their investors to other alternatives in order to preserve their capital.