Mutual fund investing by retail-oriented registered investment advisors has decreased since 1995, according to a recent study.

Of the $1.1 trillion in assets governed by retail registered investment advisors, $174.8 billion were allocated to mutual fund products as of the end of the first quarter of this year, according to a report on the registered investment advisor market published last week by Cerulli Associates of Boston. That is 17.3 percent of their portfolios, down from 23.1 percent four years ago, according to the study. The $1.1 trillion in assets with registered investment advisors in turn is up from just $534 billion in 1997. Although a smaller percentage of retail registered investment advisors' assets are in mutual funds, they did account for 3.6 percent of long-term fund assets overall as of the first quarter.

"In the early 90s, there was a boom in retail RIA mutual fund investing," said Ryan Tagal of Cerulli Associates, author of the report. "Over the past few years, though, investors have been demanding and RIAs have tried to justify their customized services so they've diversified what products they're invested in and are relying less on packaged fund products."

The 115-page report focuses on registered investment advisors who primarily provide financial planning and investment advisory services for retail customers. Retail registered investment advisors include independent investment advisors, independent broker/dealer reps with their own registered investment advisor licenses and high-net worth-money managers, according to the report. There are roughly 11,700 retail registered investment advisor firms with $1.01 trillion in assets, according to Cerulli.

Fidelity Investments of Boston leads firms in mutual fund assets invested through retail registered investment advisors with nearly 25 percent, up from nine percent in 1995, according to the report. Of the $313 billion in registered investment advisor assets (both securities and mutual funds) 'custodied' with service agents, Charles Schwab of San Francisco continues to dominate with 75 percent, which is near where it has been for the past three years, according to the report.

A record 25 percent of mutual fund flows came via fee-based outlets, including wrap accounts and registered investment advisors through the end of the first quarter, according to the report. That number is up from 20 percent in 1999 and just nine percent in 1996.

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