After growing steadily for nearly two decades, the number of open-end mutual funds has shrunk in recent years. Fund companies are launching fewer funds than usual but folding them faster than before, explaining the contraction. This is a welcome development insofar as it should gradually cull smaller, pricier funds from the industry, leaving investors with a less-daunting, cheaper set of funds to choose from.
The Industry Is Shrinking
There are about 2.5% fewer mutual funds today than there were at the end of 2015. Fund companies launched a total of 954 new funds in 2016, 2017, and thus far in 2018. But that was more than offset by the 1,161 funds they merged or liquidated away over that span, for a net reduction of 217 funds.