Strong stock markets and the improving economy, along with new alternative investment products and the continuing appeal of ETFs, are boosting prospects for the sector. New funds are opening at a rapid pace. Expect more SEC scrutiny of mutual funds boards, but new regulations for money market funds are not on the immediate horizon. Hedge fund managers are also entering into the mutual fund sector by adding registered funds in order to access retail capital.
In 2013, on the back of buoyant stock prices, some $352 billion flowed into all stock mutual funds and ETFs, a new record. Much of the money for equities was put into index funds. Meanwhile, throughout the year, concerns about rising interest rates helped force outflows from bond funds for the seventh straight month.