Bursting At The Seams

EVERY WALL STREET EXECUTIVE DREAMS OF DROWNing in cash. For an increasing number of mutual-fund managers, the fantasy has become reality -- but an unwanted one. Inundated with $300 billion worth of new investments since 1990, many mutual funds, including the Fidelity Low-Priced Stock Fund and Janus Venture, have temporarily stopped accepting new investors. "There have been closings of funds before, but never so many," says Erick Kanter, vice president of the Investment Company Institute, a money-fund trade group. "Managers need time to plot their investment strategies." The steep growth of mutual funds, which reached a record value of $1.7 trillion last year (see chart), began in earnest in 1989. As interest rates began dropping, profit-hungry investors moved away from low yielding certificates of deposit and treasury bonds to where the action is. Most of the enormous outflow wound up in professionally managed pools of securities, where annual returns of 25% or more are not uncommon.

CHART: NOT AVAILABLE

CREDIT: SOURCE: Investment Company Institute

CAPTION: MUTUAL SATISFACTION