By Matt Egan May 22, 2014: 6:37 AM ET

Stocks may be near record highs, but investors are getting out.

New data released Wednesday show investors have slashed their exposure to U.S. stocks in recent weeks, choosing instead to pile into bonds or simply hold cash.

Many are still fearful of another major drop in the stock market, and they aren’t sure how to read the current conditions. It’s a peculiar period in the market with tumbling small-cap stocks, diminished volatility and low interest rates for the foreseeable future .

Investors’ fear over the equity market has not faded from the crisis. That may need a generation to pass, said Brian Rehling, chief fixed income strategist at Wells Fargo Advisors, which manages about $1.4 trillion in assets.

It’s clear that trepidation is leading at least some investors to back off — even as many strategists stress the need to stay exposed to stocks as the economy improves.

Investors yanked about $8.2 billion from U.S. long-term equity mutual funds during the three weeks ending May 14, according to the Investment Company Institute. These funds were hit by $2.3 billion in net outflows in the final week alone.

By comparison, domestic stock funds experienced net inflows of $4.1 billion during the prior three-week period that ended April 23, according to ICI stats.

The money coming out of stocks is increasingly flowing into bonds, helping to drive interest rates unexpectedly lower. The yield on the benchmark 10-year Treasury plunged below 2.5% last week for the first time since Halloween.

ICI said bond funds generated $4 billion of inflows during the week ended May 14, contributing to a three-week influx of $10.4 billion. In fact, bond funds have enjoyed positive flows every month this year except January.

The CNNMoney Fear & Greed Index stood at 25 on Wednesday, indicating extreme fear. That’s down from 89 a year ago, which signaled extreme greed.

Wells Fargo Advisors has only experienced some modest outflows from equity funds, Rehling said, adding that it’s been nothing that is moving the needle.

He said that disparity could be due to the fact that Wells Fargo, like many brokerages, has far less exposure to the small-cap stocks that have been under assault in recent months. Most of its investors stick with large cap stocks.

Last week, the Russell 2000 index of small-cap stocks fell into correction territory (market jargon for a 10% fall from a prior high).

While Wells Fargo isn’t necessarily seeing a rush out of stocks, Rehling said many clients continue to hold exceptionally large amounts of cash in their portfolios. He’s advised them to have the courage to deploy that cash into the stock market when opportunities arise.

Stay the course. Stay well diversified. When you do get pullbacks, take advantage and move cash off the sidelines, Rehling said.