The U.S. is yet again in the gold medal position with almost 40% of the world’s mutual fund market.
The country remains in first place with $21.3 trillion in total net mutual fund assets of an overall market of $54.93 trillion at the end of 2019, according to Research and Markets.
The U.S. also accounted for a quarter of the global number of mutual funds in 2020. According to the report, the United States’ market holds almost a quarter of all funds when compared globally.
As the mutual fund industry barrels on, the major firms still control the vast majority of the market with Blackrock holding approximately $7 trillion assets under management, Vanguard $5.6 trillion, and Charles Schwab at $3.7 trillion.
The majority of US mutual fund net assets at year-end 2020 were in long-term mutual funds, with equity funds alone making up 55.3% of US mutual fund net assets. Bond mutual funds were the second-largest category, with 22% of net assets. Money market funds (14.3%) and hybrid funds (8.4%) held the remainder.
As of 2018, there were nearly 8,100 registered mutual funds vs. 7,945 in April 2019. Across the country, 46.2% of households own mutual fund investments.
Competition, consolidation, and growth
Since mutual funds cover a wide range of asset classes, they can be passively or actively managed to achieve short- and long-term returns. And the market remains highly competitive with the presence of major international players. However, the current environment presents growth opportunities during the forecast period, which is expected to only drive market competition. The report also notes that with just a few players holding significant shares, the mutual funds market “has an observable level of consolidation” in its future.
When using the S&P 500 vs. the MSCI All Countries Index (excluding the U.S.) as a benchmark – the U.S. far outperformed shares in the rest of the world over the last decade. U.S. shares grew 186%, compared with 50% for the rest of the world. In 2019 alone, as of December 27, U.S. shares rose 29% vs. 19% for the rest of the world. These numbers show why the US is at the epitome of the mutual fund segment globally.
For many large US firms, more than 40% of their revenues come from outside the U.S. In recent times, mutual fund investments have been routed through systematic investment or systematic transfer plans due to economic slowdown predictions by several AUMs for the next couple of months.
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
