Mutual Fund World Gets Smaller

July 18, 2001 ( - The economic slowdown has taken its toll on the number of mutual funds, which shrank for the first time in 10 years, according to Morningstar.

It’s also the first time that the number of new funds didn’t reach triple digits in the first five months of the year.

Between January and May this year, only 46 new funds opened, in comparison to the 133 funds that were launched in the first half of last year, according to data from Morningstar’s research group.

Further, for every new fund introduced this year, 12 have been shut down or merged with other funds, as mutual fund companies struggle to hold onto money invested. In total, 565 funds have closed this year – more than the 400 that opened in 2000.

Not surprisingly, many of the closures occurred in the tech sector. According to Lipper Inc, a company that tracks the mutual fund industry, of this year’s 25 weakest funds, 15 focus on new economy stocks.

Nevertheless, those still wanting to invest in a mutual fund need not be concerned about choice – there are about 8,300 mutual funds still in operation.