The market share of
Year to date through September, those three companies took in a third, or 33 cents, of every dollar invested in the 50 biggest fund companies. That’s up slightly from 31 cents of every dollar in 1997.
“It’s a brutal marketplace. It truly is a ‘David and Goliath’ story,” said Jeffrey Dunham, chief executive officer and president of
Some believe this increasing dominance will prompt some fund companies to exit the business. “There are a lot of small and midsize mutual fund companies trying to decide if it makes sense to stay in the mutual fund business,” said Dan Sondhelm, vice president at SunStar. “Some of it is because they’re looking to merge with another company that has the scale to do the distribution.”
Many smaller fund companies have had a difficult time bearing the cost of employing a chief compliance officer, added Christine Benz, director of mutual fund analysis at
Chuck Freadhoff, a spokesman for American Funds, noted how it is possible for large fund companies to charge lower fees because of economies of scale, and said that this is an advantage investors should consider. “We believe that there are economies of scale that favor large fund families,” Freadhoff said. “For example, if you had a global research network, as we do, that comes at a cost. When those costs are spread among more shareholders, the cost per shareholder declines.”