More good news. The latest "Mutual Fund Market Sizing" study by Financial Research Corporation predicts mutual fund inflows will bounce back. FRC projects for the next several years - no exact timeframe - mutual funds will garner between about $130 billion and $180 billion.
Findings indicate that mutual fund gross sales and redemptions were at their highest levels in 2007 and 2008, exceeding $2 trillion in each year.
The velocity of money movement will remain high for the next several years with the percentage of gross sales and redemptions remaining above historic industry averages, according to FRC. Fund assets will grow at a faster rate in the independent, regional, and RIA channels, compared to the wirehouse, bank and insurance channels. FRC projects that independent, regional and RIA firms will contribute 55 percent of mutual fund net sales by 2013, up from 48 percent in 2008.
Christine Benz (Morningstar's director of personal finance) told Reuters she believes "the worst is over" for a lot of mutual fund firms. Morningstar estimates the top 25 U.S. mutual fund firms collectively took in $12.4 billion during the first three months of the year, excluding money market funds, compared with net outflows of $110.9 billion in the fourth quarter of 2008 and net outflows of $55.2 billion for all of last year.
Benz told Reuters while more stable markets could be reassuring investors, other explanations could be that consumers opened new retirement accounts in the first quarter or put savings into asset classes such as bonds they previously would have avoided.
