Although the mutual fund industry continues to hit milestones, business could still be better, The Arizona Republic reports.

Funds netted $250 billion in new assets in 2005 to reach a record $9.2 trillion in assets, and mutual funds' market share of financial assets now stands at a record 19.5%.

But increasing competition from separately managed accounts and exchange-traded funds, coupled with the ongoing mutual fund scandal and its continued taint, have some looking to the future somewhat skeptically.

"The industry's healthy but not thriving as it might," said Don Cassidy, a senior analyst with Lipper. Separately managed accounts, Cassidy said, are gaining increasing appeal among Baby Boomers looking for "a high-touch relationship." In addition, many of these investors like the fact that SMA portfolios typically cap out at  25 to 30 stocks, thereby implying that the managers have found the most profitable choices in an investment niche.

Others are turning to low-cost, tax-efficient ETFs, which also offer intraday price transparency.

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