Mutual funds compete for investor interest with many other forms of investment. Some of these competing forms are regulated under the Investment Company Act of 1940, but others are not. Panelists at this AEI conference will discuss three competing forms of investment—exchange-traded funds (ETFs), separately managed accounts, and the customized portfolio management system known as FOLIOfn—and the competitive challenge they pose for mutual funds. ETFs are a relatively recent innovation and a rapidly growing alternative to the traditional mutual fund. They are regulated under the Investment Company Act and offer investors both diversification and other advantages that are not available in the traditional mutual fund structure. ETFs are based on indexes and are not yet available in managed form, so they do not offer individualized portfolios. Separately managed accounts and FOLIOfn are not collective investments and are not regulated under the Investment Company Act, but they do offer investors an opportunity to achieve investment diversification while allowing somewhat more individualized investment choice than mutual funds.

This conference, the eighth in the series entitled “Is There a Better Way to Regulate Mutual Funds?” will discuss the advantages and disadvantages of these competing modes of investment in relation to mutual funds.