(MONEY Magazine) – Reacting to falling prices and a less certain future, small investors are abandoning utilities. Standard & Poor's utilities average was down 6.3% by late April, even as the S&P 500 was up 7.8%. Moreover, AMG Data Services of Arcata, Calif. reports that since January, assets in mutual funds that own utility stocks have shrunk by $1.6 billion, or 8%.

In part, investors are spooked by deregulation. Although no one knows how this once stodgy industry will cope with change, "it means stock prices and valuations will be much more volatile for shareholders," says William Tilles, a senior analyst with Smith Barney. He speculates that companies will protect themselves by paying out smaller dividends. For dependable yield, adds Value Line analyst Art Medalie, investors should look to the 30-year Treasury bond, recently yielding just below 7%.

--Lisa Reilly Cullen