Between the end of 2000 and the end of 2005, assets in U.S. mutual funds swelled from $6.96 trillion to $8.91 trillion, according to data from the Investment Company Institute. Compounded annually, that's growth of a handsome 5.1%, and if the current trend continues, the industry should pass the $11 trillion mark by 2010.

But it's still just one-third of the growth the industry realized between 1982 and 1999, which included one of the greatest bull markets in history. During the 1990s, the industry grew by an astonishing 21%. Some experts believe that exchange-traded funds could slow growth further.

"Is 5% growth sustainable?" asked Brian Reid, chief economist at the ICI in Washington. "I think that largely depends on what will be the appreciation of the market. I think that is the largest contributing force in the industry right now."

Reid observed that since fund assets have grown so large, new inflows are making less of an impact. The last bear market further dampened asset growth. And there are several other caveats. Most prominent, Lou Harvey, president of Dalbar told Investor's Business Daily, are ETFs, which have grown five-fold in the last five years.

"They have a much more efficient structure," Harvey remarked, adding that ETF providers can also design them to look a great deal like a diversified, actively managed mutual fund.

(c) 2006 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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