Is the end of the great U.S. mutual fund boom in sight?

Recent data show that the nation's investors have been putting significantly less money into funds in recent months. And that could signal the beginning of intensified competition at home and a scramble for customers abroad, fund company executives say.

"It's looking more and more like a mature business," Jeffrey L. Shames, the chairman and chief executive of Massachusetts Financial Services, said of the U.S. market, which has 7,000 mutual funds and almost $6 trillion of assets under management. "Although growth rates have been fantastic, most of the growth is coming through the appreciation of assets because of the success of the stock market."

Declining net flows - and what to do about them - are a fundamental concern right now for mutual fund industry leaders, who are gathered in Washington this week for the annual conference of the Investment Company Institute.

"You're seeing some concern there is a possible saturation in the U.S., with some characteristics of overcapacity," William Ennis, the chief operating officer of First Union's capital management group, said in an interview before the conference began.

The concern is largely prompted by first-quarter net flows-the amounts investors put into mutual funds minus the amounts they cashed out.

Through March 31, net flows totaled $42 billion-less than half the level of a year earlier, according to Financial Research Corp. of Boston.

Though total assets under management grew in March by 2.6%, the gain came largely as a result of investment performance.

March's result was a rebound from February, when the stock market dipped and assets fell 1.6%.

"It will be difficult to match the growth rates" the industry has had, said Tom Tyson, an analyst at Financial Research. "We think there's room for growth, but it might not be as strong as it has been in the past."

It is unclear what investors are doing with the money they once put in mutual funds. They seem to be putting at least part of it into individual stocks, in a bet that they can outperform mutual funds, industry watchers say.

Until now, the growth of mutual funds in the 1980s and 1990s has been astounding. Assets under management have increased more than tenfold since 1982.

To be sure, the United States will remain a profitable place for mutual fund companies. After all, a mature U.S. market "doesn't mean Coke doesn't grow 20% a year," Mr. Shames said.

But fund companies are increasingly branching out abroad, where the mutual fund business is in its infancy and rapid growth of the kind the United States has experienced is likely.

"Everything that happened in the U.S. in the last 15 years is on the verge of happening in Europe, Latin America, and Asia," Mr. Shames said.

Many have more than a toe in the water. Almost 10% of Massachusetts Financial Services' $110 billion of assets under management was gathered abroad.

And First Union is considering partnerships with overseas distributors, Mr. Ennis said.

"It's a necessity to have a global platform," he said.

Battles remain to be fought on the domestic front too.

Washington Mutual Inc.'s brokerage arm is offering incentives to its sales representatives to keep redemptions low, said Pamela Dawson, president of the unit.

Managers watch redemption and exchange levels in their territories and offer "counseling" to sales reps whose clients don't keep their money put.

"Absolutely, there is a concern regarding the net flows," Ms. Dawson said.

A moment of truth will come when the bull market comes to a close, fund executives say. Then investment performance will no longer mask the fact that people are putting less money into funds.

"When the market stops, a lot of firms are going to see their revenues drop precipitously," Mr. Shames said. "Then it becomes a consolidating game."

Among those expected to be buyers are Goldman, Sachs & Co. and Bank of America Corp.

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