The Greek mutual fund industry’s assets under management shrank by 7.8 percent or 691 billion drachmas ($1.85 billion) in September, mainly as a result of falling stock prices after the deadly attacks of September 11 on the United States. In its monthly review, the Union of Greek Institutional Investors (UGII) said total mutual fund assets under management fell to 8.1 trillion drachmas last month from 8.79 trillion in August. Shrinking assets squeeze fund company revenues, which mainly come from management fees on those assets. The erosion in equity fund assets was especially marked during the month. Locally invested stock funds saw assets shrink by 23.95 percent, or 466 billion drachmas. The Athens bourse’s benchmark index lost 19.41 percent in September. Despite the rout, most investors held on to their mutual fund shares. Domestic growth funds experienced net redemptions of 4.53 percent, while international equity funds, which saw assets under management shrink by 17.4 percent, had net redemptions of 4.62 percent. UGII said mutual fund investors also pulled money out of stock funds and switched to lower-risk balanced and bond funds. Balanced funds saw assets rise by 3.17 percent, with the number of shares increasing by 6.07 percent. Assets of domestic bond funds investing in Greek government paper were stable in September with no net redemptions, while international bond funds absorbed inflows to boost assets by 30.41 percent. Market volatility was less for Greek money market funds. Their assets shrank by 3.92 percent and net redemptions reached 2.82 percent, UGII said. In the year to September, Greece’s mutual fund industry has seen total assets under management implode by 22.3 percent to 8.18 trillion drachmas (24.0 billion euros) from 10.52 trillion (30.76 billion euros) at end-December 2000. The industry includes 25 fund management companies that run a total of 270 mutual funds. The government makes frequent reference to the positive difference between our expected growth rate and the EU average this year and next. This difference is not sufficient and must be maintained in coming years beyond the immediate future.