Mutual funds' 2009 sales outlook is modest, according to Keefe, Bruyette & Woods.

Forty-four percent of respondents to the KBW Inc. unit's semiannual survey on retail investment product distribution trends said they expect mutual fund sales to decline this year. The firm surveyed 36 "gatekeepers" at a variety of distribution channels in December and January.

The distributors said they still expect moderately healthy growth in mutual fund and managed account sales over the next five years but that they expect exchange-traded funds to grow faster than traditional mutual fund products; 62% said they expect to increase their use of ETFs to some degree.

Thirty-six percent of distributors expect investors to remain more conservative in their asset allocation. Sixty-five percent expect increased demand for products that can generate income growth.

KBW said the survey indicates that demand will remain comparatively better for fixed-income and more conservative equity strategies. Among publicly traded asset managers, Franklin Resources continued to score the best: 53% of respondents ranked it a top-five fund provider.

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