Investors continued to pull their money out of mutual funds yesterday, but industry officials said the pace of withdrawal was slower than Monday when the stock markets collapsed.

The withdrawals forced some mutual funds to sell stock to raise cash to pay departing investors, especially during the market's morning decline, according to fund executives and traders. They said, however, that many funds had cushioned themselves against falloffs in the stock market and had cash or credit lines to meet demand.

In recent years mutual funds have become a favored investment of small investors eager to take advantage of the rising stock market.

There was no sign of significant pressure on the resources of most major mutual funds, and yesterday's rise in the stock market itself also served to boost the stock funds. The Dow-Jones industrial average closed up 102 points yesterday after collapsing 508 points Monday.

Unlike insured deposits in banks, money placed in mutual funds is entirely at risk: If the stock or bond markets fall far enough, a mutual-fund investor can lose his entire investment. This has happened during past market slumps, but mostly in isolated cases.

During the last few years, mutual funds have experienced tremendous growth and have outperformed many other kinds of investments.

In 1986, the average fund yielded a return of 16.2 percent, far above the less-than-6 percent return of money-market funds, according to Business Week magazine. Only the stock market as a whole did better than stock mutual funds last year.

Nonetheless, the largest mutual-fund company, Fidelity Investments, said it would not immediately lift the seven-day wait on payouts for cashing in holdings it imposed Monday.

There were also indications some funds were selling some of their stock portfolios yesterday, although the volume did not appear to be large enough to significantly affect the market's course.

"There certainly have been a lot of redemptions, but also a lot of movement within the fund complex, to bond funds or money markets," said Michael Delaney, spokesman for the Investment Company Institute, the trade association of mutual funds. "There certainly is {stock} selling going on, but we are not aware of any problem areas."

An estimated 20 million households own mutual funds of all kinds, according to the trade association, and the funds' assets totaled $848.4 billion at the end of August. Of that, $234.3 billion was in equity funds -- although spokesman Delaney said that figure probably had shrunk during the last few days.

Many mutual-fund companies offer an array of funds, so that an investor can choose between putting his money into stocks, bonds or government securities -- all through the same company. But a company still needs cash to transfer a customer's money from a stock fund into a money-market fund -- cash that can become scarcer during declines in the stock market.

Jack Cantwell, a trader in large stock blocks for Dean Witter in New York, said funds were selling stock yesterday morning. But they pulled back as some companies repurchased their own stock and trading closed in index futures and index options, shoring up the market.

Justin O'Neill, a spokesman for Fidelity Investments, the largest mutual fund firm -- which has assets of $81.2 billion -- said redemptions were running at one-third to one-half of Monday's pace, which he declined to quantify. Even after Monday's withdrawals, he said, the funds remained solid.

Fidelity Magellan, the largest stock mutual fund, had assets of $10.1 billion at close of business Monday, compared to $10.7 billion on Friday.

That $600 million -- 5.6 percent -- decline was due to a combination of the fall in the stock market and a decline in the number of fund holders, O'Neill said.

Another Fidelity fund with a more conservative investment strategy, Fidelity Puritan, fell 3.4 percent during the same period.

At Baltimore-based T. Rowe Price, vice president Steven E. Norwitz said about three-quarters of the money that had been withdrawn from Price equity funds had been transferred to other kinds of funds run by Price.

Price was able to meet its obligations without selling stock, said Norwitz, who noted that the shifts involved less than 2 percent of total fund assets.

"It is not like the {equity} funds are withering away," he said, although he noted that telephone requests for withdrawals or transfers had been running a relatively heavy 18,000 a day during the last two days.

Norwitz also noted that equity mutual funds, which often include a diversity of securities in each fund, generally have not fallen as far as the stock market.

The riskiest Price fund fell 24 percent over the month while the Dow fell 34 percent, he said, while the most conservative fund was down about 6 percent.