Bad news for the mutual fund industry about the slowdown and concentration of net sales has just been compounded. Data shows that the market value of fund companies has declined 14 percent since 1997, while the market value of institutional asset management companies has risen 32 percent.

However, Steve Pierson, a vice president with the investment banking firm of Putnam, Lovell, de Guardiola & Thornton of San Francisco, which compiled the data, believes the value of mutual fund companies will once again rise after a "shakeout" within the next two years. And Burton Greenwald, president of B.J. Greenwald & Associates, a mutual fund consultant in Philadelphia, believes the market's unrealistically high revenue expectations for fund companies because of their stellar growth in assets in the past ten years, will eventually subside.

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