The conventional wisdom since the financial crisis of 2008 and 2009 has been that retail investors are staying out of the equity markets in part because they no longer trust that it is giving them a fair shake. Not too long ago, inflows into equity funds were starting to pick up again, but then came the most recent debt market pyrotechnics that had people withdrawing funds all over again.

According to a Bloomberg analysis, about $75 billion was withdrawn from equity mutual funds during the past four months. That compares with $72.8 billion in outflows from October 2008 through February 2009, following the bankruptcy of Lehman Brothers. About $177.7 billion has been removed during the past 30 months from mutual funds and exchange-traded funds that invest in U.S. shares.

All in all, the trend is clear. The issue is why. Some think that investors are merely biding their time, waiting for a good moment to jump back in. Others wonder if there is something more profound going on, something that has to do with market structure, an issue we've discussed often over on FierceFinanceIT.  In this view, the rise of high-frequency trading, the ornate developments of the ETF market, the rise unfamiliarity with dark pools and the like have contributed greatly to a collective lack of confidence in the market. And that has them staying away.

It's unclear just how unfair the market has become, if it is unfair at all. But the SEC is plenty concerned, and if it didn't have so much on its plate, market structure would be an even bigger issue. The issues are complex, and high-frequency traders, who have added a lot of liquidity to the market in recent years, have probably gotten a bum rap, though the practice is not without controversy.

But what can be done to inject confidence? The problem boils down to perception as much as anything else. That problem is not easily solved, apart from a massive communications and education program by exchanges and other market participants.

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