Thirteen of the nation's top 20 fund managers have so far blocked redemptions since Canberra guaranteed deposits in some financial institutions, but not others, the Investment and Financial Services Association (IFSA) said.
The guarantee does not cover investment companies, prompting investors to shift their cash to the safety of banks.
"So we're probably talking... about 12 billion dollars frozen," association chief Richard Gilbert told public radio.
Three of the country's biggest investment firms -- Everest Babcock & Brown, Perpetual Ltd. and Axa Asia Pacific -- have already announced they have frozen billions of dollars to stem the cash flight.
"There was a big pickup in redemptions in the last few days in response to what has been going on out of the government guarantee and other issues in the market," Perpetual's group executive of income Richard Brandweiner said.
"We have got to protect the interests of all our investors and we have got to protect their income and cap