Rapid growth for global mutual fund industry

31 March 2014   Category: News, Global   By Asia Asset Management

The global mutual fund industry’s assets have grown more than sevenfold in the last two decades, according to a new research report by ICI Global. The paper offers a statistical analysis – the first of its kind conducted on post-2008 financial crisis data – of the numbers of mutual funds and assets under management in various regions around the world. It also details the prerequisites for mutual fund growth, such as strong, appropriate regulation and capital markets, and the primary factors driving fund growth, such as a country’s economic development and demographics and whether a country has a defined contribution (DC) plan that allows participants to invest in mutual funds.

Strong market returns and net sales

The report, Globalisation and the Global Growth of Long-Term Mutual Funds, finds that mutual funds worldwide have experienced strong growth in assets over the past two decades, increasing from US$4 trillion in 1993 to almost $29 trillion in September 2013. This growth reflects increases in each of four broad regions – the United States, Europe, Asia-Pacific, and the rest of the world. Broken out by region:

  • The US market expanded nearly 600%, to $14.3 trillion in assets;
  • European markets grew 640%, to nearly $9 trillion;
  • Asia-Pacific fund assets rose 450%, to $3.3 trillion;
  • Fund assets in the rest of the world – including Canada, Chile, and Brazil – grew 2,200%, to $2.3 trillion.

“The data paint a picture of a booming environment for mutual funds,” said ICI Senior Economist Chris Plantier, author of the report. “Though local factors, such as high returns on Brazilian bond funds, and changes in statistical reporting are behind some of the more exceptional growth seen in the “rest of the world” region, the research shows that, worldwide, investors are expressing a clear demand for mutual funds as a savings vehicle.”