Flow of New Funds Slows to a Drip
The fund business is getting tougher, and that's good news for you.
Amid shriveled returns and sales, the pace of new mutual fund launches last year fell to its lowest level in more than 20 years. The number of mutual funds rose by just 165, according to the latest figures from the Investment Company Institute, the fund industry's largest trade group. The modest uptick underscores the glut of funds out there, the maturing industry's consolidation and flagging interest in funds after two tough years for stock investors.
This trend shouldn't rattle fund investors, however. As we said in a November column, Main Street investors will only benefit from heightened competition for their money. Of course, the news isn't as good for the fund managers who will inevitably find less demand for their services.
Man From Atlantis
The shrinking number of new offerings is no doubt related to the ocean of funds already out there. At the end of last year, there were than 8,300 stock, bond and money market funds, more than double the total 10 years ago, according to the ICI. And the slimming trend should continue because more than half of those funds are stock funds, which haven't seen the same winnowing as bond funds.
Consolidation and a lousy market have slackened
the flow of new funds
|Source: Investment Company Institute.|
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