In 1993, mutual fund assets globally totalled only around $4trn, the research, compiled and analysed by ICI Global, reveals.
Broken down by country, the US market for mutual funds expanded by nearly 600% in the 20 years to September of 2013, to $14.3trn in assets under management, while the European mutual fund grew by 640%, to nearly $9trn, according to ICI Global, which has entitled its report Globalisation and the Global Growth of Long-Term Mutual Funds.
Assets held in mutual funds in Asia-Pacific, meanwhile, rose 450%, to $3.3trn, and fund assets in "the rest of the world" – a category that is defined here as including Canada, Chile and Brazil – grew 2,200%, to $2.3trn.
In a summary of its findings, ICI Global, which represents fund managers in the US and around the world, said the research was believed to be the first of its kind conducted on post-2008 financial crisis data of the numbers of mutual funds globally, and the assets under management these funds hold.
Worldwide Total Net Assets of Mutual Funds
*Trillions of US dollars; year-end, 1993–2013
* Data are as of September 2013.
Note: Data include equity, bond, mixed/other, and money market funds. Funds of funds are not included except for France, Italy, and Luxembourg. Data include home-domiciled funds, except for Hong Kong, the Republic of Korea, and New Zealand, which include home-and foreign-domiciled funds.
Source: International Investment Funds Association
'Booming environment'
ICI senior economist Chris Plantier, author of the report, said that the data, when taken together, painted "a picture of a booming environment for mutual funds".
"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," Plantier added.
The report also looks into the prerequisites for mutual fund growth, and finds these to include "strong, appropriate regulation and capital markets".
Fund growth, the report reveals, is fuelled by economic development in the respective countries in which the growth occurs, as well as by demographics.
Whether a country has a defined contribution (DC) savings plan for its citizens, which allows participants to invest in mutual funds as a means of saving for their future, is another key factor, the ICI Global data reveals report reveals – a fact that was highlighted by ICI global managing director Dan Waters.
Noting that the data highlighted the aging populations of developing countries, and that the world's developing countries will be facing "similar demographic pressures in the not-too-distant future", Waters said: "We expect that demand for regulated funds will continue to grow, particularly as investments in participant-directed DC plans, in response to these trends.
"Because DC plans offer a transparent method of funding retirement that empowers individuals by giving them ownership and control, we believe that they will play an increasingly important role worldwide."
Middle Class Growth
The ICI Global report reiterates other research that has suggested a major role in the future growth of the global mutual funds industry will be played by the growing middle class in many developing countries.
The report notes, for example, that although populations in Asia (excluding Japan) are relatively young, the proportion aged 65 and older is expected to rise gradually over the next 50 years. "This factor, coupled with projections by the Organisation for Economic Co-operation and Development that the global middle class will rise from 1.8 billion in 2009 to 4.9 billion people in 2030 – with most of this growth occurring in developing Asia – make it clear that there is considerable potential for growth in mutual fund assets outside the United States and Europe," the summary of the report's findings notes.
Qiumei Yang, executive vice president and head of Asia-Pacific for ICI Global, noted that investors in the Asia-Pacific region are becoming more familiar with mutual funds as a means of managing and growing their wealth, and that access to cross-border funds is increasing – though availability to such cross-border funds is still uneven.
"We believe that if investors have access to a wider range of funds, they will increase their use of funds," Yang said.
ICI Global is the international arm of the Washington, DC-based Investment Company Institute, which represents 98% of the US funds industry. It opened an office in Hong Kong last year, to focus on the Asia Pacific region.
To read and download the 44-page report from the ICI Global website, click here.
