MUTUAL FUNDS ACROSS GLOBE

MUTUAL FUNDS ACROSS THE WORLD

Mutual funds are a big force across the world. In developed countries a lot of investors just take the mutual fund route because it is very difficult for investors to operate in the markets in these countries on their own. This is due to the fact that there are large institutional players in the market and they leave little room for the smaller investors who then prefer to make their investments through the mutual fund route.

Another factor that is often witnessed across many markets across the world is that a large part of the assets in these markets is concentrated in equity oriented funds. This means that debt is a lower proportion of the total funds under management and investor prefer taking an equity exposure through this route.

Data for the position of mutual funds across the world is available from the Investment Company Institute (ICI) and this has been analysed to check out how the various countries stand out in terms of the schemes and the assets under management.

The US is the biggest market for mutual funds and a large part of the investor base in the country puts its money into these instruments. Stock oriented mutual funds are the largest section of the total mutual fund industry in the country and they account for over 50% of the total assets under management.

While there is some individual data available for certain countries till recent periods overall figures for the world are available only till the beginning of calendar 2005. The available figures show that at that point of time out of the total mutual fund assets across the world 50% of the figure was constituted by assets held by funds in the US with another 35% coming in from Europe and 11% from Africa and Asia Pacific.

Another interesting figure is that unlike India where there is a large corporate presence in the mutual fund industry the situation is completely different in the US. Individual investors, which means small investors or people who invest in their own names directly or indirectly hold nearly 90% of the total assets of mutual funds in the US. If one looks at the figure for some individual categories of funds then the figure is even higher than 90% for stock funds that invest in equities, bond funds that invest in debt and hybrid funds which use a mixture of both the assets in their portfolio. This is because a large number of people increasingly use these funds to meet their various long term prospect of planning for various types like retirement, education etc

If we look at the actual figures of various mutual funds across the world then the attention has to be focused on the largest market the US where the assets under management have been growing with each passing year. In 1998 for example the total asset base of US funds was $5,525 billion which just four years later at 2002 had gone up to $ 6,390 billion, The journey continued its upward movement and by the end of 2004 the US asset base had grown to $ 8,106 billion It has to be noted that the intervening period was classified by the dot com crash as well as the September 11 attacks on the world trade center in the US which caused a severe dent in the confidence of investors across the world in equities. The important thing is that even though equity funds or stock funds as they are called have a large asset base in the country there is adequate development of other types of mutual funds also whereby there is adequate scope in terms of other assets available for investment where investors can switch their funds as per the need.

As far as other markets in North and South America are concerned there are two other countries that stand out. Canada for example has witnessed its assets grow to $ 249 billion in 2002 from $ 213 billion four years ago. This also picked up pace in the next two years and at the end of 2004 stood at $ 413 billion. This figure matches that of several other developed countries across the world. Another emerging market in the form of Brazil had however a mixed trend as the assets for the mutual funds here actually dipped in the period 1998-2002 period as it went from $ 118 billion to $ 96 billion. The recovery after that was spectacular as in the next two years the figure shot up to $ 220 billion. The fall was mainly the result of a sharp decline in just one year of 2002 when the assets went down to below the $ 100 billion mark from $ 148 billion a year ago.

Europe is one place where there is a wider distribution of mutual fund assets in terms of the number of countries where the route is quite popular with investors. Significantly it will be surprising for several people to learn that two of the biggest markets here in terms of assets under management are France and Luxembourg. Both of these markets had assets under management in excess of $ 800 billion at the end of 2002 with France marginally ahead. Two years later the situation was similar with both the entities just below $ 1,400 billion but this time around it was Luxembourg, which was marginally ahead.

In 2002 there was Italy with $ 378 billion under management that was ahead of both UK and Germany. By 2004 the situation remained the same as Italy had notched up $ 511 billion of assets under management In 2002 UK had around $ 288 billion under management while the figure for Germany was just over $ 209 billion which became $ 492 billion and $ 295 billion two years later. On the other hand the figures for Ireland surged from $ 250 billion to $ 467 billion during 2002-04.

In Asia Pacific too there was quite some surprises in the year 2002. Just four years earlier Japan had the largest assets under management in this area with a figure of $ 376 billion as assets under management with Australia second at $ 295 billion. However in the intervening time the situation witnessed rapid changes with Australia nosing ahead with $356 billion under management while Japan had actually witnessed a fall to $ 303 billion. As Japan failed to rise above its economic problems the gap became even wider and by the end of 2004 Australia had $ 635 billion under management while the figure for Japan stagnated at $ 399 billion Hong Kong and South Korea were the other two countries with a figure of around $ 150 billion under management in 2002. Here Hong Kong saw a surge in the next two year to $ 343 billion while Korea went to $ 177 billion. At this point of time India was quite small with the figure just touching $ 20 billion which is quite insignificant and this figure then went up to $ 32 billion by the end of 2004. Among other countries South Africa was in the position with a similar figure of around $ 20 billion under management in 2002 but two years later had moved up smartly to $ 54 billion.

When one shifts to the number of schemes that are in operation in a country then there are small changes that one will witness as against the situation of assets under management. In the Americas it is the US that has the largest number of schemes with the figure in the country standing at 8,244 at the end of 2002 while Canada had the second largest assets in the area when it came to the number of schemes Brazil was higher because there were 2,755 schemes in Brazil as compared to 1,956 in Canada at that point of time. Two years later at the end of 2004 US had just 8,044 scheme slightly lower than the figure earlier while the figures for Brazil and Canada were 2,859 and 1,915 respectively.

However in the year 2002 there was stiff competition for US as far as the number of schemes was concerned because in Europe France had a total of 7,773 schemes while Luxembourg had 6,874 schemes present. The battle became even close two years later a France had 7,908 schemes while Luxembourg had 6,855. In 2004 there was another country, which was also high on this score and this was Spain with a figure of 2,559 schemes.

In Asia it is Korea and Japan, which have had the largest number of schemes. In 1998 for example Korea had the largest number of schemes across the world with a figure of 13,442 but by 2002 this had come down to 5,873 and stood at 6,636 at the end of 2004. Japan too has witnessed a fall in the number of scheme from 1998 to 2004 with the figure going from 4,534 to 2,552. India meanwhile is slowly on the uptrend with the figure going from 87 in 1998 to 394 by the end of 2004.