New York - One of the most serious challenges the fund industry will continue to face is managing investor expectations, according to Charlie Johnson, president and CEO of Franklin Resources. The combination of scores of novice investors, many of whom have never lost money in stocks, and investors across the board with unrealistically high expectations for returns, could spell disaster for mutual funds, he said.

"At some point we're going to have a serious bear market...and investors are going to lose money," Johnson said. "A huge number of investors who will be disappointed will take their money and not come back for a very long time."

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