Like an ageing boxer who is still on top but starting to lose some of their pace and power, the mutual fund is slowly but surely being supplanted by a newer, brasher invention: the exchange traded fund.
Before dwelling on why, it is important to acknowledge what a phenomenal invention the open-ended mutual fund has been — arguably one of the greatest in financial history, whether ranked by success, longevity or social usefulness.
Globally, there are more than 70,000 mutual funds with combined assets of almost $40tn, according to Morningstar. The combined private equity and hedge fund industries can muster maybe a fifth of that, and with a more controversial social impact. Despite a decade of rampant growth, there is still just $9tn in ETFs globally. Yet the era of the ETF is dawning.