Assets Crest Record $10 Trillion Mark

Exchange-traded funds may be grabbing most of the headlines these days, but mutual funds are still pulling in the big bucks.

The U.S. mutual fund industry crossed the $10 trillion threshold for the first time in October, when the combined assets of the nation's open-end funds rose by $286.6 billion, or 2.9%, to $10.013 trillion, according to the Investment Company Institute, a Washington, D.C., trade group.

The data include assets in stock funds, hybrid funds, long-term bond funds and money market funds.

By comparison, ETF assets rose 9.4% to $383.3 billion in October from $350.3 billion in September, according to ICI. (Mutual funds themselves are big investors in ETFs, but the ICI strips out these holdings to avoid double-counting assets.)

The mutual fund industry has come a long way since the beginning of the decade, when the combination of the dot-com bust and a trading scandal prompted some investors to switch to ETFs. In 2002, mutual fund assets fell for the first time in 19 years to $6.3 billion from $6.9 billion in 2001. (ICI spokesman Edward Giltenan says stock-market declines were largely responsible for the drop, as investors added $120 billion more to mutual funds than they withdrew that year.)

ETFs, which are baskets of stocks or other securities that trade throughout the day on an exchange, certainly have a lot of advantages, including lower management fees and tax efficiency. They're also largely immune to market timing and late-trading abuses.

However, the mutual fund industry has demonstrated its staying power.