As the post-election market landscape continues to take the shape of a bull, the smart investor may want to invest not only in mutual funds, but mutual fund firms themselves, USA Today reports.

While the Standard & Poor’s 500 has risen 5.5% this year, the top-10 public mutual fund companies have risen 14%. Over the past 10 years, the numbers are even more staggering. While the S&P has gained 195% over that time, the Lipper Management Company Index, the research firm’s measure of those top 10 companies, has plowed ahead 346%.

Ironically, at least for mutual fund owners, the reason for the success is management fees. It’s really simple: the more profitable the fund is, the more profits its management company receives. And with President Bush’s proposal to privatize Social Security, shareholders of publicly owned fund companies could benefit even more. While fund managers themselves hate the idea of administering smaller accounts – because they are so expensive to manage – the money coming in will increase, and so will the profits for the company.

And as the market creeps toward all-out bullishness, investors will take money out of bond funds and start dumping it into equity funds and international funds, which carry management fees of two times and sometimes three times those of bond 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.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.