A look back at the growth of the mutual fund history over the past 20 years should give a firm lesson to those who claim it can't possibly grow much bigger, according to Bloomberg columnist Chet Currier.
In the early 1990s, U.S. funds investing mostly in stock, bond and money markets passed a milestone when their assets hit $1 trillion--10 times what they had been a decade before. By the middle of this decade, U.S. funds held more than $9 trillion, according to the Investment Company Institute.
Throughout the years, experts kept assuring everyone that this couldn't keep happening and the mutual fund industry had matured, Chet states. The experts took a static, or two-dimensional view of what was actually a three-dimensional situation. In a static view of things, one business grows by taking business from others. Yet, the banking, insurance and pension management businesses have not shriveled up, and somehow the whole pie has got larger.
The great success of mutual funds hasn't proved to be a static event and has opened the door to new competition from alternative vehicles, such as hedge funds and exchange-traded funds. These new entrants are pursing new opportunities in a growing mass market for investing and money management, while not destroying the growth of mutual funds.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.