Investors have pulled $98 billion out of equity funds in the first quarter of 2008, according to Emerging Portfolio Fund Research (EPFR).

The Financial Times  describing the outflow of cash as “a record shift that accelerates a longer-term trend away from US and western European stock markets” caused by the credit crisis and subprime mess in the US.

“The outflows also accelerate a trend for investors to put their money either in ultra-safe cash options such as money market funds, or into riskier markets and high-fee products such as hedge funds,” according to the report. “They are abandoning the middle ground of mainstream equity and fixed income funds, especially in the developed markets.”

Investors pulled $70bn from US, Japan and Western Europe funds during the quarter. Funds with inflows were almost all focused on Taiwan, Russia, the Middle East and Africa.