Unlocking Real Value Blog

AK In The News: Challenges Facing The Mutual Fund Industry

Ignites (a Financial Times Service) asked me to comment on the results of a poll that they just conducted on what industry participants feel is the biggest challenges facing the mutual fund industry. Respondents believe that the two biggest challenges are market volatility and overall economic uncertainty; competition from ETFs was also a popular answer.

While I agree that these are large concerns, I was surprised that two other choices – regulation and equity flows – were not ranked higher.

To quote from the article: ‘Yet, market volatility and ETFs should not be the only concerns on mutual fund professionals’ minds, according to Andy Klausner, founder and principal of AK Advisory Partners. Though he is not surprised that overall market uncertainty and competition from ETFs lead the list of concerns in the Ignites poll results because of the amount of press both issues have received, he says he is surprised that regulation and flows into equity products are not bigger concerns.

“Especially after last week when Elizabeth Warren made her first appearance on the Banking Committee, there is growing concern within the industry that regulatory issues will once again take center stage. While the first target may be banks, the fear is that other financial institutions will eventually be targeted as well,” he writes in an e-mail response to questions.

“As to equity flows in general, with bond yields so low, and the long-term return on stocks having been stagnant, more attention has been given to alternative investments,” Klausner continues. “I think that they, [like] ETFs, pose a threat to the mutual fund industry.””

What do you think?

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