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Mutual fund mania continues

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Despite recent scandal that rocked the mutual fund industry, and despite the rise of ETFs, SMAs and other alternatives, shareholders’ opinions about the mutual fund industry have steadily improved for four years. According to new research from the Investment Company Institute, mutual funds’ favorability among shareholders reached 77 percent in 2007, from a low of 71 percent in 2003. In 2007, more than three-quarters of mutual fund shareholders familiar with mutual fund companies have “very” or “somewhat” favorable impressions of fund companies.

Other findings include:

  • Mutual fund owners report that investment performance is the most influential of the many factors that shape their opinions of the fund industry. Seven in 10 mutual fund shareholders indicate fund performance is a “very” important factor influencing their views of the industry, and more than four in 10 cite fund performance as the most important factor.
  • Mutual fund companies’ favorability rating moves with stock market performance. Shareholders’ opinion of the fund industry was lowest in 2003 – the year in which the latest bear market bottomed out – but has improved each year since, moving in tandem with the market.
  • Investors are confident that mutual funds will help them meet their financial goals. Eight in 10 mutual fund shareholders in 2007 are “very” or “somewhat” confident that investing in mutual funds will assist them in reaching their financial goals.

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