How the Funds Are Faring

The U.S.'s mutual funds often seem as tough, persistent and irrepressible as the 100,000 salesmen (mostly part-timers) who peddle them. In the past 18 months they have been hit by a stock-market crash, a blistering attack on their performance from Pennsylvania's Wharton business school, and a severe critique of their aggressiveness from the Securities & Exchange Commission. Yet, to hear the leading fund dealers talk at their annual convention in Miami Beach last week, all this was in the past --and the bull was back in the mutual-fund business.

Despite the salesman's perpetual confidence, the mutual funds are still hurting--though not so badly as they once feared. The industry has so far done little to clear up the abuses cited by the SEC last August. Last week the Investment Company Institute, a trade organization, reported that redemption of fund shares, which have been running far ahead of last year, rose to a record $142 million in September. After reaching an alltime high of more than $25 billion in assets in August, the funds failed to hold their gain in September; assets declined by more than $400 million. Sales of fund shares this year are expected to be off 18% from 1961's record of almost $3 billion.

Things are not all dark, however. Redemptions usually rise when the stock market is going up--the Dow Jones industrial average reached a new record of 750.77 last week--and people are more inclined to gamble on their own than to pay a fee for the judgment of professional fund managers. Though redemptions have been rising faster, total sales of all funds are on the increase again. The stock market rise has helped to boost fund assets about $6 billion above last year. While the Dow Jones index gained 27% in the twelve months ending Sept. 30, net assets of the ten biggest funds rose an average 24% per share in the same period.

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