In "Wall Street shares: Poised to play catch-up with other financials," I suggested that investment bank and broker/dealers shares could be vulnerable to further weakness in the period ahead.

Another group that may also be at risk because of the fast-spreading contagion in global credit markets is the asset management sector (e.g., Standard and Poor's 500 Asset Management & Custody Banks Index).

Up until recently, the shares of publicly traded money managers have done well in comparison to the broader equity market (e.g., S&P 500 index). What's more, relative to other financials, the sector has been a star performer.

Arguably, investors seem to believe that the positive fundamentals of the last few years -- strong inflows, booming global markets, favorable demographic trends, and sheer momentum -- will outweigh any near-term negatives.

Based on how rapidly conditions have deteriorated so far, that optimism seems unwarranted. In fact, logic suggests further credit market woes could soon negatively impact the sector in a number of ways. Among the possibilities:

• Investors increasingly favor "safer" investments (i.e., with smaller management fees) such as money market and short-term government bond funds
• There is a growing preference for traditional savings vehicles such as bank certificates of deposits and savings accounts, which draws assets away from publicly traded, non-bank money managers
• Falling market returns lead to increased competition, boosting marketing costs and pressuring revenues
• Rising financing costs cut into margins and limit management flexibility
• Concerns about risk to reputation force some firms to step in and bail out ailing funds at considerable expense

With that in mind, the recent outperformance may actually represent a decent selling opportunity.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World.

Mark Hulbert discussed an interesting new study in Sunday's New York Times. He sums it up: "Don't even consider holding actively managed mutual funds unless you're willing to switch funds often. All other fund investors should simply buy and hold an index fund for the long term."

The author of the study argues that mutual funds underperform over the long-term not because of the inability of professional managers to pick stocks, but because of the way money flows into funds affects returns. That's right! Blame yourself for the poor performance of your funds! Basically, Jonathan Berk, the University of California professor who wrote the paper, argues that managers who perform well attract greater investments and so the funds stop performing well.

The professor suggests a complicated method of checking your funds regularly and selling bottom-performing funds and buying top-performing ones -- sounds to me a lot like performance-chasing. It also seems to run contrary to Berk's complaint that managers who perform well take on too much in the way of assets. Isn't performance-chasing what causes that problem?

Particularly given the costs of switching funds frequently (mainly taxes), I think investors will still do far better owning index funds. It's a lot easier too, isn't it?