NEW YORK (CNN/Money) - Mutual-fund investors who fueled one of the longest bull runs in U.S. history are now contributing to the market's screaming decline.

Fund flow figures this year show that small investors on Wall Street are so scared that they're scrambling out of stock funds in favor of safer bond funds. As a result, equity fund managers have been doing a lot more selling to meet those redemptions.

"Mutual funds are clearly a very big reason why the stock market is declining," said Hugh Johnson, chief investment officer at First Albany Corp. "This is the other side of the mountain."

Based on the pace of stock selling in the first week alone, the projected equity fund outflow for July is a record $56 billion, according to TrimTabs.com, a California fund tracker. The previous outflow record was $29.9 billion in September 2001, caused by the fallout from the Sept. 11 terrorist attacks, according to the industry trade group Investment Company Institute (ICI).

"Clearly investors are not interested in stocks," said Carl Wittnebert, director of research at TrimTabs.com.

Investor appetite for stock funds started turning negative in June. Investors pulled $11.8 billion out of equity funds that month and $4 billion for the five trading days ending July 2, according to figures from AMG Data Services, another fund flow tracker. The June equity fund losses are also the largest since September 2001.

By contrast, investors funneled $9.7 billion into bond funds that month, with the biggest increases to funds that invest in high-quality corporate bonds and moorage-backed securities. Bonds saw inflows of $548 million for the week ending July 2.

Other figures show that many types of stock investors are turning gun-shy, Johnson said. In the first quarter, the pace of new buying fell by $100.1 billion, based on a quarterly report issued by the Federal Reserve. Among the groups on the sidelines are international investors, whose buying fell by $62.4 billion, and mutual fund shareholders, whose buying fell by $26.5 billion. Figures for the second quarter will be available in August.

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"That's only the first quarter, and the trend definitely continued in the second quarter," Johnson said.

Mutual fund investors were big sellers in the first quarter because of waning interest in equities -- and they will be even bigger sellers in the second quarter, Johnson said.

Still, the ICI argues that fund investors are not driving the market. The Fed's report notes that mutual fund assets account for $2.9 trillion, or about 19 percent of all equities. And, fund flows into equities remained strong through the end of May -- about $72 billion, or nearly twice the level from the same period a year ago.

"You can't make judgments based on one month," said ICI spokesman John Collins.