A mutual fund is an investment strategy that is professionally managed. Mutual funds are a financial product that takes money from various people and invests it in other financial assets, including stocks, bonds, etc. This is a common type of investment and is often managed by a financial firm. In addition, these AMCs or asset management firms assemble a group of individuals and pool the funds of various private and institutional investors with similar investment objectives. Mutual funds enable investors to hedge against unsystematic risks by investing in a diverse range of securities from different industries. Individual stocks are susceptible to systematic and unsystematic hazards, but mutual funds are only exposed to systematic or market risk. A rise in disposable income, the mobilization and allocation of funds toward profitable investments, and a greater emphasis on domestic savings contribute to expanding the mutual fund assets market. Mutual fund companies employ technologies such as artificial intelligence, Robo-advisors, cloud computing, Big Data & analytics, and blockchain to provide convenient and effective services and reduce operational expenses. As a result, these factors promote the rise of the mutual fund assets market.
Multiple variables influence mutual fund investments, including a greater emphasis on domestic savings, disposable income growth, and revenue mobilization and allocation to successful assets. Investing in mutual funds also enables small- and large-scale fund savers worldwide to participate in investment plans and profit from the expansion of the capital market. In addition, the significant development and standardization of product and service offerings within the mutual fund industry and the expanding proliferation of various private sector funds are driving the growth of the mutual fund assets market.
The mutual fund industry has adopted new technologies such as Robo-advisors, artificial intelligence, blockchain, cloud computing, and big data & analytics the quickest. In addition, mutual fund companies employ these technologies to centralize procedures to boost efficiency, simplify access to complex services, and reduce the mutual fund industry's costs and risks. Through the implementation of more integrated and value-added services, customer loyalty has increased. As a result, the deployment and implementation of digitalized technologies have expanded to provide more convenient and effective services at reduced operational costs, significantly contributing to worldwide market expansion.
In numerous nations, it is projected that governments, regulatory agencies, and other authorities would support and expand the mutual fund industry. The regulatory bodies also adopt agreements with e-wallets, e-commerce distribution, and equivalent other market platforms to further develop and penetrate the industry. In addition, mutual fund distributors in several nations actively contribute to the market's rapid expansion. Their governments strongly urge them to do so to diversify their product line. In turn, this improves the quality and depth of the relationship with channel partners, accelerating the revenue growth of mutual fund providers. Increased government aid and sophisticated mutual fund programs will likely have a significant positive impact on the market in the future.
North America will command the market while expanding at a CAGR of 10.41% during the forecast period. Mutual funds have been one of the primary economic drivers in North America for nearly a century. In 2019, 46.4% of American households reportedly owned mutual funds, according to Finance, Insurance, and Real Estate. This is because it is essential to assist families in managing their finances in times of dire need. Individuals, corporations, and other institutional investors use money market funds as cash management instruments because they offer a high level of liquidity and some of the highest short-term yields in the region.
Due to their superior returns compared to other forms of mutual funds, most North Americans selected equity mutual funds. It also helps families achieve their long-term financial objectives, such as pension, tax-advantaged, and asset retirement portfolio plans. In addition, the region's market for mutual fund assets is developing rapidly due to the economy's rising liquidity problem, fueling consumer demand for passive funds.
Europe will likely advance at a CAGR of 11% and hold USD 29,664 billion by 2030. Rising service and industrial industries in Germany, France, and Ireland have contributed significantly to Europe's economic growth. The European Fund & Asset Management Association states that households possess 30.1% of the market for mutual funds' financial assets, followed by banking intermediaries, pension funds, and insurance firms. In addition to direct investments in mutual funds, investors make indirect contributions through several schemes, including pension, employment, tax-saving, and insurance plans. Consequently, due to these reasons, individuals now have a better grasp of mutual fund schemes, which has increased the demand for mutual funds in the region.
Given that it creates a large quantity of employment, the mutual fund industry is essential to the growth of the European economy. In addition, the mutual fund industry enjoyed significant development during the pre-pandemic health crisis due to increased exports and a surge in demand for consumer products and mineral fuels. Since the beginning of the epidemic, however, the mutual fund business has suffered.