Mutual Funds Expected to Decline 70%

A new report on the mutual fund industry is projecting that the number of mutual funds will decline by 70% over the next 5 years.

In the report The Global Credit Crisis: Implications for North American Wealth Management, Boston research firm Celent points out that North American equity mutual funds have seen negative returns of 30% to 50% recently, and most have not shown a positive return since the Internet bubble.

Facing projections of no real returns in the next decade, many redundant mutual fund families will disappear as retirement accounts and mass affluent portfolios shift to stable value, annuities, cash and bank deposits, fixed income instruments and exchange-traded funds.

Financial Planning magazine quotes the author of the report as saying “with the exception of retirement accounts, ETFs will eventually replace index funds”.

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