The global mutual fund assets market size was valued at USD 50,767.2 billion in 2021. It is expected to reach USD 135,226 billion by 2030, growing at a CAGR of 11.5% during the forecast period (2022-2030). A mutual fund is an investment strategy that professionals manage. An example of a financial instrument is a mutual fund, which aggregates funds from several different investors and allocates them to various securities like stocks, bonds, etc. It is typically managed by an asset management firm and is one of the most popular investment options. Additionally, these AMCs or asset management companies gather a group of people and combine money from several private and institutional investors that share the same investing goals. Through their investment in a varied portfolio of equities from various industries, mutual funds assist investors in hedging against unsystematic risks. Mutual funds are solely exposed to systematic or market risk, whereas individual equities are liable to systematic and unsystematic hazards.
A few factors contributing to expanding the mutual fund assets market are growth in discretionary income, the mobilization and allocation of resources toward profitable ventures, and a greater emphasis on domestic savings. To offer convenient & effective services and save operational costs, mutual fund companies also use technology like artificial intelligence, Robo-advisors, cloud computing, Big Data & analytics, and blockchain. As a result, these elements fuel mutual fund assets market expansion. Yet, substantial mutual fund expenses, rising administrative costs, and a volatile market are some problems preventing the industry from growing.
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Growing Investment in Mutual Funds and Adoption of Digitalized Technologies
Investments in mutual funds are driven by various variables, including a greater emphasis on domestic savings, an increase in disposable income, and the mobilization and allocation of revenue toward profitable investments. Additionally, investing in mutual funds enables small- and large-scale fund savers worldwide to participate in investment plans and profit from the expansion of the capital market. Further, the mutual fund assets market growth is propelled by the tremendous development and standardization of product and service offerings within the mutual fund sector and the growing proliferation of several private sector funds.
The mutual fund industry has adopted new technologies like robot advisors, blockchain, artificial intelligence, big data analytics, and cloud computing the fastest. Additionally, mutual fund businesses use these technologies to centralize procedures to increase efficiency, provide simple access to complex services, and lower costs and risks for the mutual fund industry. Implementing more integrated and value-added services have aided in achieving client loyalty. Deployment and implementation of digitalized technologies have expanded to offer convenient & efficient services and lower operational costs, significantly contributing to the global market's growth.
The capital market environment for mutual funds is volatile. Additionally, volatility refers to how much a fund's net asset value changes over time and indicates that it is riskier than a fund with low volatility. Additionally, when there is severe volatility, the mutual fund offers minimal returns, and investors suffer significant losses. Therefore, a volatile capital market environment hinders the expansion of the mutual fund assets market due to continual fluctuation and changes in the prices of its underlying securities, such as stocks and bonds.
Government Support and Initiatives
It is anticipated that governments, regulatory agencies, and other authorities will support and grow the mutual fund business in many nations. The regulatory agencies also implement partnerships with e-wallets, e-commerce distribution, and comparable other platforms in the market to further improve the expansion and penetration. Additionally, mutual fund distributors across several countries actively contribute to the market's rapid development. They are strongly encouraged by their respective governments to increase the range of products they offer. As a result, this aspect is boosting the quality and depth of the relationship with channel partners, speeding the revenue growth of mutual fund providers. The market is anticipated to benefit significantly in the upcoming years from increased government assistance and sophisticated mutual fund programs.
The global mutual fund assets market is segregated based on the fund type, distribution channel, investor type, and region.
Based on the fund type, the categories include Equity Funds, Bond Funds, Money Market Funds, and Hybrid & Other Funds.
The equity fund section will likely grow at a CAGR of 10.42% and hold the largest market share. An aggregated investment fund called an equity fund, commonly referred to as a stock fund, invests assets in the stock market to generate returns for the fund's owners. In addition, investors primarily invest in equity funds because they provide multiple stocks under a single product solution, diversifying investors' existing portfolios. In addition, components like diversification, systematic investments and withdrawals, and professional money management that analyzes current and potential stock fund holdings are driving this segment's expansion. The growth of the segment of equity funds is anticipated to be hindered, however, by a lack of ownership and enormous hidden costs.
The bond fund section will hold the second-largest share. A bond or debt fund allows investors to invest in corporate, government, municipal, convertible, and other debt instruments. In addition, investors invest in bond funds to generate a monthly income. Some major market trends include the convenience of long-term bond investments and rapid diversification for investors with a low minimum investment requirement. Moreover, components like increased returns on investments, liquidity, stability, and a vast array of options for investors are driving the growth of the bond funds market.
Based on the distribution channel, the categories include Banks, Financial Advisors/Brokers, Direct Sellers, and Others.
The financial advisors/broker section is most likely to grow at a CAGR of 10.5% and hold the largest market share. A professional who delivers clientele financial services depending on their financial conditions is a financial advisor. Brokers are licensed by the financial authorities in their respective countries to sell mutual funds on behalf of their clients. Brokers guide the entire process by assisting with know-your-customer (KYC) compliance, providing thorough information about the scheme, and filling out the mutual fund application. In addition, financial advisors provide bundled product portfolios geared toward specific investments and typically execute trades on clients' behalf in financial markets.
The bank section will hold the second-largest share. Mutual fund providers have partnerships with several banks, and an investment advisor at a bank assists clients in creating customized portfolios. The fact that banks have a lower minimum account balance requirement than brokerage firms stimulates customers to invest in mutual funds, thereby contributing to the expansion of the market as a whole. As a result, this contributes to the growth of mutual fund purchases from banks. In addition, banks offer mutual fund products to customers who obtain loans and account services through cross-selling strategies.
Based on the investor type, the categories include Institutional and Individual.
The institutional section will likely grow at a CAGR of 10.87% and hold the largest market share. An institutional investor refers to a business or organization that buys, sells, and handles stocks, bonds, and other financial assets on behalf of its customers and investors. Institutional investors possess specialized knowledge and extensive resources for investigating a range of investment opportunities, which are typically unavailable to individual investors. Moreover, these investors can trade in the securities and markets of various types of funds and influence the market's demand and supply of securities. In the coming years, these factors are anticipated to spur market expansion.
The individual section will hold the second-largest share. Individual and retail individuals purchase and sell shares, exchange-traded funds (ETFs), and mutual funds. Individual investors are also known as retail investors. Individuals invest their own money to achieve specific short-term or long-term financial goals. In addition, mutual funds offer customized and appropriate products based on an investor's risk profile, investment horizon, and style, significantly contributing to the market's growth.
The global mutual fund assets market's region-wise segmentation includes Asia Pacific, North America, Europe, and LAMEA.
North America and Europe will Dominate the Regional Market
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North America will command the market while expanding at a CAGR of 10.41% during the forecast period. For almost a century, mutual funds have been one of the main economic drivers in North America. For instance, the Finance, Insurance & Real Estate reports that 46.4% of American households owned mutual funds in 2019. It is crucial to help families manage their finances at times of dire necessity. Money market funds are also used as cash management instruments by individuals, businesses, and other institutional investors since they offer a high level of liquidity and some of the best short-term yields in the area.
Due to their higher returns compared to other mutual fund types, most people in North America generally favored equities mutual funds. It also aids families in achieving their long-term financial goals, including pension plans, tax-favored retirement plans, and asset retirement portfolio plans. Additionally, the region's market for mutual fund assets is expanding quickly due to the rising liquidity issue in the economy, which is driving consumer demand for passive funds.
Europe will likely advance at a CAGR of 11% and hold USD 29,664 billion by 2030. The rise of service and manufacturing activities in Germany, France, and Ireland has contributed significantly to Europe's economy. The European Fund & Asset Management Association reports that families own a 30.1% share of the market for mutual funds' financial assets, followed by banking intermediaries, pension funds, and insurance companies. In addition to making direct investments in mutual funds, investors also make indirect contributions through various programs, such as a pension, employment, tax-saving, and insurance plans. Thus, due to these factors, people now have a greater understanding of mutual fund schemes, which has improved the demand for mutual funds in the area.
Given that it generates significant employment, the mutual fund sector is crucial to expanding the European economy. Additionally, due to an increase in exports and a surge in demand for consumer goods and mineral fuels during the pre-pandemic health crisis, the mutual fund sector experienced tremendous growth. The mutual funds business, however, has suffered since the pandemic's onset.
List of key mutual fund assets market companies profiled