Mutual fund executives kicked off their annual convention in Washington last week by patting themselves on the back for keeping a market downturn from evolving into an investor stampede.
"A major reason for this investor steadfastness, in the face of uncertain markets and adverse events, is investor education," said Matthew Fink, president of the Investment Company Institute.
Mr. Fink and ICI chairman Jon S. Fossel, flanked by two large video screens so an audience of more than 1,500 could see them, boasted that fund assets have continued to grow, albeit at a slower rate.
"Bond fund redemptions did not occur in a big panic but as a steady response to rising interest rates, which led many investors simply to transfer from bond funds to other types of mutual funds," Mr. Fink declared.
And Mr. Fossel said fund asset growth is still something to brag about, although it has slowed to an annual rate of 17.1% over the past five years, from 26.4% in the preceding decade. Mutual funds now hold $2.3 trillion of assets.
"Most other industries undoubtedly envy our so-called 'slower' growth rate of recent years," said Mr. Fossel, who is chief executive of Oppenheimer Management Corp., a New York company that manages $29 billion of funds.
Mutual fund executives at banks were upbeat, saying they felt the two ICI leaders spoke for them as well as mutual fund companies, the dominant members of the organization.
"I see a spirit of cooperation between banks and mutual fund companies in terms of service," said Donald A. McMullen Jr., executive vice president of the capital management group at First Union Corp., Charlotte, N.C.
"If you go back 10 years or so," he added, "you were seeing bankers and mutual fund companies arguing."
But Mr. Fink and Mr. Fossel also tried to rally the group against what they believe are burdensome regulations that may confuse many consumers and keep them from investing in mutual funds.
Mr. Fossel called for the industry to act as "leaders for open and understandable communication with our shareholders." But he derided regulations that compel fund companies to produce prospectuses that overwhelm investors.
"Let us replace them (prospectuses) with a plain-English profile prospectus and an off-the-page prospectus that is a model of clarity, objectivity, and usefulness to those it is truly meant to serve - our shareholders," Mr. Fossel said.
The railing against cumbersome disclosure forms seemed to strike a chord with bank mutual fund executives.
"I very much support a simplified prospectus for the average investor," said Lynnette C. Gibson, senior trust officer at Star Bank, Cincinnati.
W. Christopher Maxwell, executive vice president at Cleveland-based Keycorp, agreed. He pulled out a 22-page prospectus for the bank's own Victory Funds, which he oversees, and said, "This is hard stuff to read . . . forget about the fact that it's boring and complicated."
Mr. Fossel also encouraged executives to strive to keep expenses low and "never be ashamed to disclose what we charge for the value we offer."
