Predictions of Contractions in the Mutual Funds Industry May Be Premature as Fund Companies Start Hiring Again

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News that Legg Mason's legendary value investor Bill Miller is retiring at the end of April after guiding the Legg Mason Value Trust mutual fund for 30 years may seem like one more sign that actively managed mutual funds have had their moment on the stage. After all, not a single one made the top quintile of performance for third quarter.

Is it time to pass the baton to exchange traded funds (ETFs) and other passive investments? Not so fast. Predictions of the eminent demise of the mutual fund industry might be hasty. There is no question that there has been a crisis of confidence. The industry bled assets during the financial crisis and has been hard hit by the growing popularity of ETFs.

It should be remembered, however, that with $11 trillion in assets, the mutual fund industry is still the Godzilla of order flow on Wall Street. By contrast, the Investment Company Institute (ICI) says exchange-traded funds, though growing, have so far only attracted about $1 trillion. By ICI's count, some 51 million households own mutual funds and about 90 million individuals have money that is some sort of mutual funds. The median account is about $100,000. Plus, mutual funds are still a popular retirement vehicle. Out of the total $17.5 trillion IRA and defined contribution retirement market, about $4.7 trillion is invested in mutual funds.

Mutual Fund Industry is Hiring

So, though job postings have declined this year, the mutual fund industry is hiring even as Wall Street sheds workers.

As we reported last week, one factor that's driving the search for talent is the fact that pension funds are hiring more money managers to run their money. According to Pension & Investment Daily, pension funds hired managers to run $26 billion of alternative assets, $13 billion of equity assets and $9 billion of fixed income assets in the first nine months of 2011.

PIMCO hired the most, receiving 10 mandates in the first nine months of 2011, P&I reported. Many mutual funds are mirrors of strategies run for large institutional investors. The $240 billion PIMCO Total Return has been a huge magnet for assets in recent years.

Here's What They're Looking For

PIMCO, T. Rowe Price, MFS Investment Management, Eaton Vance, Fidelity, TIAA-CREF and TD Ameritrade are all looking for a variety of financial specialists and IT workers in different places around the globe.

Thrivent Financial for Lutherans, more than $73 billion in assets under management, needs financial representatives throughout the Midwest. It is also looking for business analysts and IT people.

In Denver, Great-West, a leading provider of employer-sponsored retirement savings plans and ranks as the nation's fourth-largest retirement plan record keeper, has openings for senior securities compliance specialist and java developers, among others.

Boston-based Putnam Investments, which has been on a hiring binge since ex-Fidelity CEO Robert Reynolds took over in 2008, is still searching for analysts, accountants and senior software developers, among other positions.

Legg Mason, meanwhile, needs a portfolio manager at its Baltimore headquarters in Harbor East.