  The mutual fund industry manages about a quarter of the assets in the U.S.
stock market and thus plays an important role in the U.S. economy. The question
of how much control is concentrated in the hands of the largest players is best
quantitatively discussed in terms of the tail behavior of the mutual fund size
distribution. We study the distribution empirically and show that the tail is
much better described by a log-normal than a power law, indicating less
concentration than, for example, personal income. The results are highly
statistically significant and are consistent across fifteen years. This
contradicts a recent theory concerning the origin of the power law tails of the
trading volume distribution. Based on the analysis in a companion paper, the
log-normality is to be expected, and indicates that the distribution of mutual
funds remains perpetually out of equilibrium.
