If the U.S. stock market ever drops out of the sky, most mutual fund managers won't be packing parachutes.

The cash reserves that stock funds keep in short-term interest-bearing investments are down to a 27-year low of 4.3 percent, according to the Investment Company Institute.

This reserve promises to stay skimpy for the foreseeable future. Because of the pressures on them to squeeze out the best performance numbers possible, many stock fund managers wouldn't dare increase their reserves significantly even if they thought it was a good idea.

This isn't all bad, and it doesn't necessarily portend disaster. You can argue that the policy of staying "fully invested" that many funds follow today has helped prevent bear markets.

What's more, fund investors, unlike fund managers, have built up a healthy reserve a record $1.6 trillion-plus in money market funds, almost 20 percent more than they had a year ago. In theory at least, investors could move some of this money into stock funds when prices fell, giving stock managers the cash they would need to bid for stocks.

Even so, the stock funds' situation is enough to unsettle anybody who's been feeling all snug and warm in the lap of the bull market.

"How comfortable is cash?" says Steve Leuthold, chairman of the investment research firm Leuthold Group in Minneapolis. "Well, consider that in a mere 10 days following the 1987 crash, net redemptions amounted to 4.5 percent of equity mutual fund assets."

Simple math suggests that if fund investors redeem more than the amount of reserves in the funds, fund managers will have to sell stocks to meet the redemptions. That can create a spiral that leaves everybody dizzy.

Before you call your fund group demanding stepped-up safety precautions, though, give some thought to what you'd be asking your manager to do.

Many stock funds began de-emphasizing cash reserves years ago, taking the position that their main job was to pick stocks using a consistent style. Asset allocation, or shifting money from one class of investments to another, was deemed the customer's business.

As recently as autumn 1990, when stocks tumbled in advance of the Gulf War, ICI data showed cash reserves as high as 12.9 percent. They've been in a steady decline since, eventually coming at yearend 1999 to their lowest level since they stood at 4.2 percent in December 1972 just before a two-year bear market.

Today's investors measure performance closely against a yardstick like the Standard & Poor's 500 Index, which contains no cash at all. The cash ratio in any good S & P; index fund tends to fluctuate between zero and about 0.2 percent or 0.3 percent. If active managers hope to keep up in a rising market, they don't have much room for cash reserves.

Whatever impulse might have remained among fund managers to move in and out of cash was squelched in 1996, when the manager of the biggest stock fund of all, Jeffrey Vinik at Fidelity Magellan, left his job after losing a bet on bonds and money-market securities. If Vinik wasn't safe to try this, nobody was.

Bill Gross, acclaimed manager of about $180 billion in bonds at Pacific Investment Management Co., recently offered another slant on stock managers' motivation:

By pumping money into the financial system when stocks ran into trouble in 1987 and again in 1998, Chairman Alan Greenspan of the Federal Reserve "has demonstrated to investors that he will, when required, lower interest rates and provide liquidity to support the stock markets," Gross said in a recent commentary.

Gross argues that that has led stock managers to conclude there is "a floor below which stocks cannot fall." Though nobody knows where that floor might be, he says, "the mere fact of a floor anywhere close to existing levels emboldens stock investors to buy more and more since they can make a lot but lose only a little."

Of course the Fed has never acknowledged, and never will, that any such floor exists. When push comes to shove, though, will Greenspan or any other monetary official let stocks go into the tank without trying to save them?

And if Gross' floor does exist, stock-fund managers would have almost a fiduciary obligation to keep their cash reserves low. Otherwise, they'd be passing up an offer too good to refuse.

In the "fully invested" age, fund money doesn't leave the stock market. It simply moves from one stock to another, one market sector to another. This process, known as "rotation," can have painful effects, but never depresses the market as a whole.

This makes many people happy, including investors in index funds that parallel the course of the broad market measures.

But it's also a strong argument against bull market complacency. If fund managers ever decide they can't or don't want to stay fully invested any more, the scramble to raise cash reserves could turn into a stampede. Even the Fed might have trouble containing it.

Chet Currier is a columnist for Bloomberg News.

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