A marketer’s heartfelt homage to mutual funds on their 100th

My family takes turns labeling one another as “sentimental Irish”—a reference to an old song performed by the Irish song and dance man Tony Kenny. I’ve kicked the lyrics to the sidebar below so I stay on task, without tearing up. I wish you could have heard Tony sing it live in a room filled with Chicago Irish Americans.

It’s the 100th anniversary of mutual funds today that’s bringing the sentimental out in me. I would have missed the date completely if not for the Financial Times article “The mutual fund at 100: Is it becoming obsolete?”

The link in the Ignites daily email caught my eye, prompting the immediate thought: “Shouldn’t Ignites have prepared its own coverage, even a special celebratory report?” What about the Wall Street Journal for that matter? Did I miss it? Where are all the emails and LinkedIn posts giving a nod to the mutual fund?

Also, is predicting death really the way to mark the achievement of 100 years, even if shinier, brighter, cheaper things have come along since?

A nod to where we’ve been

As seems appropriate, MFS, who established the first U.S. open-end mutual fund on March 21, 1924, celebrates “a century of wealth creation for all” on this landing page.

When announcing a year-long anniversary celebration, Investment Company Institute (ICI) President and CEO Eric J. Pan said, “Mutual funds and their fellow products are the greatest democratizing force in the investing world, giving people unprecedented access to capital markets.”

“Today,” according to Pan, “more than 120 million Americans rely on registered investment funds to pursue their financial goals, whether it’s saving for education, homeownership, or retirement.”

As my previous boss Calamos Investments’ Bob Behan made a point of consistently stressing to his team, the mutual fund industry also has given millions of people over the last 100 years—those in investment management, distribution (including financial advisory firms), marketing, accounting, legal/compliance professionals—a very good life.

My wistfulness over the otherwise muted milestone-noting has to do with that. As a career, mutual fund marketing has offered countless opportunities to be in the thick of economic and financial news and to be charged with simplifying communications that lead people to more comfortable lives. I’m grateful.

Moving on

But the investment industry has moved on, made obvious in this quote from John Rekenthaler of Morningstar (Morningstar, who built its business on mutual fund analysis): “I don’t see what a mutual fund can do better than [an] ETF … It’s a better mousetrap… Eventually the mutual fund is dead.”

The FT does a fine job, I guess, of describing the current landscape—ETFs, separately managed accounts (SMAs) and collective investment trusts all have greater appeal now to many professional investors including financial advisors and end investors.

The article includes a Mutual Funds timeline. As much as I understand the technical limitations of presenting too many dates in the narrow width of the page, I thought there should have been more milestones included. It’s the reason I’m not the one you want editing a photo montage for someone’s funeral. I always lean toward more. I don’t like things to be over.

But mutual funds aren’t over, according to Dave Nadig, an ETF industry pioneer and financial futurist at VettaFi until the beginning of the year. “I don’t actually think the mutual fund is dead. I think the mutual fund is now a retirement vehicle,” he told the FT.

That makes sense and the article provides some supporting commentary, too.

Let’s not steal from the joy of the day

Have you heard the saying that “comparison is the thief of joy”? I was reminded of it by a commenter to the FT article. “I don’t get why this is presented as a competition. Mutual funds and ETFs are just structuring tools and they’ll be used when appropriate from an investor / investment local regulatory or tax angle,” wrote the wise Argle son of Blargle.

Agree! Portfolios can be a mosaic that includes a range of investment types! Reclaiming my joy for the 100^th, that’s where I’m going to conclude this.

ETFs are awesome, it’s an exciting space and one we work in daily. SMAs, the non-wrapper wrapper, are really interesting, too, with powerful technology that will democratize tax minimization as an investment benefit. Love it all and I’m excited for the digital marketing implications.

But could we have gotten here without mutual funds? Let’s take a moment—even if it’s sentimental—to show some respect to the centenarian whose products and assets, including distribution and marketing, will continue well into the future.