ETF Trends
ETF Trends

The year 2009 was a bust for the mutual fund industry. Hundreds were liquidated or simply merged out of existence. Is this the entry point for exchange traded funds (ETF) to gain a larger share of this lucrative market?

Major mutual funds that had their day bit the dust in 2009. About 2,000-plus mutual funds were liquidated or consolidated, trimming the fat from the mutual fund industry, explains Chuck Jaffe for MarketWatch. It was the biggest pruning the industry has ever seen, Jaffe says. [Reasons investors choose ETFs over mutual funds.]

Among the many funds that shuttered this year are the following:

  • Ameritor Security Trust: This was the last remnant of the Steadman funds, the worst fund family in history, Jaffe says. Started in the 1950s, these funds ultimately were nicknamed the “Dead Man” funds because they routinely finished last in the rankings and it was assumed any living shareholder would have bailed out. In its final 12 months, the fund posted a 55% loss; you’d think the fund would have needed a 100% loss to be wiped out completely, but with shares trading for fractions of a penny, it simply “ceased to be an investment.”
  • The Kids Fund: This opened just before the holidays in 2008 to help parents “seeking to educate their children on the virtues of investing” by owning stocks in big, brand-name companies that kids know and love.
  • Ralphs Park Cyclical Equity: The plan was to make money in all conditions, “rooted in the philosophy that an investor’s limited time and money should be invested only in the strongest investments with the lowest volatility.” Before liquidation, two-thirds of the value was lost.
  • Utopia Funds: As the market was reaching its bottom, Utopia was filing paperwork to pull the plug; the family’s four funds were closed at the end of March.

If your mutual fund closed, why not consider a similar ETF to replace it? ETFs are transparent, have intraday liquidity, no investment minimums and are, on average, cheaper than mutual funds. [Why ETFs are grabbing the mutual fund market.]

For more stories about mutual funds, visit our mutual fund category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.