No surprise: clients aren’t feeling bullish. From May 2002 to May 2011, investors pulled $29 billion from Canadian equity funds, according to Investor Economics. During the same period, their American counterparts took $51 billion out of domestic equity funds.

So where has all the money gone?

Clients have been flocking to income, dividend and balanced funds, particularly after the 2008 financial crisis. And according to Investor Economics, between December 1, 2008 and February 28, 2011, ETF assets under management have more than doubled. Three years ago, for every $1 clients invested in ETFs, $43 went to mutual funds; now, it’s $1 to $21.

Here’s what industry players had to say about these fund flows:

“It’s been more of an asset class change [from Canadian equity] rather than people exiting the market. There are investors for whom it may be too daunting to determine the appropriate asset mix or stock pick on their own.” – Eddy Eng, senior economist, Investment Funds Institute of Canada

“Typically, investors want to experience a smoother ride. Therefore, active management will remain as a long-term, growing industry. A team of investment specialists focused on specific parts of a client’s portfolio will be able to ride out [negative] waves in a less volatile fashion. Based on an investor’s objectives and risk tolerance, it’s not always about trying to shoot the lights out in performance.” – Sam Febbraro, president & CEO, Counsel Portfolio Services

“Following the market events of 2008, investors’ appetite for risk diminished. Retirees and pre-retirees — who are focused on preserving their capital — were hit particularly hard during the equity market downturn, and this has in turn resulted in an extended bias towards more conservative investments.” – Sandeep Gosal, senior analyst, Investor Economics

“The majority of Canadian investors are delegators, so they’re going to look to a financial advisor to manage their money. I think the mutual fund industry will see single-digit growth and prosper over the next decade. Will the industry have to lower MERs? I think so. But at the same time, we’re able to see what the back office costs are. We’d love to lower fees, but they’re high due to regulatory requirements [related to] investor protection.” – Vince Valenti, president, Independent Planning Group Inc.

“Active management is difficult, and a good active manager is scarce. Beta exposure is abundant and relatively inexpensive. Investors will be more discerning about what they’re getting for what they’re paying. This isn’t lowest cost wins: value is what will come under scrutiny.” – Mary Anne Wiley, managing director, head of distribution, iShares Canada