E X H I B I T 7 Number of Investment Companies by Type
Source: Fidelity platform, September 1, 2015: 16,660 listed mutual funds and ETFs.
Exhibit 10 shows the explosive growth in equity mutual funds. Over the 40-year period from 1975 to 2014, they have grown from $37 billion to more than $8 trillion. And, while the exhibit does not show it, much of the growth within mutual funds has occurred in stock index funds with very low management fees.
seemed to be out of touch with traditional value-based investing. Internet startups and telecom stocks without revenues were priced to unprecedented levels based on potential for eyeball conversion into cash revenues. Sea- soned professionals avoided these stocks to their own det- riment. On a relative basis, their performance suffered compared with the dot-com stocks, and many didn’t last in the industry long enough to endure the crash in 2000/2001. Some quantitative models also became pop- ular during the 1990s, although they didn’t survive the recession. Regrettably, their funds couldn’t handle devel- opments when model parameters explored new ground. A notable high-profile government bailout of Long-Term
INDUSTRY TRENDS—SMART BETA AND ROBO INVESTING
In the past 20-plus years, even the approach to proper stock valuations has experienced controversy. During the Internet bubble (dot–com) era in the 1990s, stock valuation
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T HE J OURNAL OF I NVESTING
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