Mutual funds withstand hedge fund seige

Despite the continued – if slowing – growth of hedge funds, mutual funds will continue to dominate money management for the foreseeable future, said market observers at the ICI annual conference today. Hedge funds have underperformed equity mutual funds in recent years, but growth continues, in large part, because individual investors are trying to emulate the success institutions have had with such funds, said Michael Goldstein, a managing partner with Empirical Research Partners LLC of New York. But that growth is slowing, said John Streur Jr., senior managing partner with Managers Investment Group LLC of Norwalk, Conn., and that's good news for mutual funds. In the last quarter, mutual funds saw a greater percentage increase in assets than did SMAs – a major feat considering that fund growth came on a much larger asset base, Mr. Streur said. And while ETF assets continue to increase at a rate greater rate than that of mutual fund assets, such growth is limited because ETFs do not offer active management, Mr. Streur said. Of course, when ETFs begin to offer active management, that’s when “things could get interesting,” said Mr. Streur.