Lower Margins, More Mergers Predicted

SAN DIEGO, Calif. - Competition among mutual fund companies will continue to drive down margins and force more mergers and acquisitions of firms and the consolidation of funds, according to mutual fund executives.

Decreasing net flows due to slowing sales and rising redemptions are pressuring mutual fund companies to offer more compensation and services to distribution channels as well as more information and services to investors, industry executives said. This is squeezing profit margins, they said.