This article is from the How to Start an Investment Program tutorial, author unknown.
In the chapter on Index Funds, I discussed how you could match the performance of the S&P index by simply putting your money in a mutual fund that invested in a basket of stocks that mirrored the index. Matching the performance of the S&P for the last decade would have been hard to beat, but sooner or later you may want to try investing in a fund that has a chance to beat the average. That's what this section will go over, the many choices you will have in selecting a mutual fund and a mutual fund company.
Today there are more mutual funds than there are companies listed on the New York Stock Exchange. An incredible number (over 6,000), and I'm sure that there will be more on the way. The simple reason for this is their popularity. Individual investors, pension managers, and foreigners are pouring billions of dollars into our stock markets with much of it going into mutual funds. And with the fund companies taking a percentage of the amount invested right off the top as a management fee, it's not hard to understand why new companies are trying to get in on the action. It's BIG business.