The slowdown in rollouts marks a dramatic reversal from several years ago.
In 2000, for example, fund companies launched 729 funds, which amounts to a rate of nearly two a day. That year, of course, marked the top of the last lengthy bull market, and many companies were tripping over themselves to cash in on investors' exuberance.
Indeed, the steady stream of mergers and liquidations, coupled with the decrease in fund launches, paint a picture of an industry that is still making amends for its lack of restraint in the late 1990s and early 2000s. Back then, many fund companies resorted to high-risk, or faddish, funds to catch investors' attention.
But it might also reflect an industry that is still skeptical about recent improvements in the economy and the stock market. After all, the vast majority of fund companies are seeing only modest improvements in fund sales.
The three biggest complexes accounted for nearly three-quarters of the net flows into mutual funds last year.
Of the $228.7 billion in net flows experienced by stock and bond funds last year, American Funds, which is run by Los Angeles-based Capital Research and Management Co., picked up $83.7 billion, or 36.6%. The Vanguard Group Inc., Malvern, Pa., attracted $55.2 billion, or 24.1%, and Fidelity Investments, Boston, got $29.4 billion, or 12.8%, according to Financial Research Corp., Boston.
"Flows are positive, but they certainly are not huge," said Donald Cassidy, a Denver-based senior researcher with Lipper Inc. "The fact that they're going to a very short list of companies inhibits those that are not on that list in making decisions about going forward."
At the end of 2004, there were 7,101 stock and bond funds, down from 7,153 in 2003, according to the Investment Company Institute, Washington, the main lobbying group for the fund industry.
Industry experts predict the number of mutual funds will continue to shrink in 2005. Higher legal fees as a result of the regulatory fallout from the trading scandal are forcing many companies, particularly smaller ones, to look closely at their product lineups.