The global ‘regulated’ managed fund market soared above US$71 trillion last year on the back of strong returns and increasing demand, according to the latest annual data supplied by the US-based Investment Company Industry (ICI).
Total funds under management (FUM) rose more than US$7 trillion year-on-year during 2021, the ICI study shows, as products on offer across the world approached 132,000 after growing by over 6,000 during the 12-month period.
In a tightly defined universe the ICI survey only covers open-ended managed funds governed by clear regulations. The data strips out fund-of-funds assets but includes unlisted managed funds, exchange-traded funds (ETFs) and institutional products.
Since 2012 the global regulated fund market has more than doubled FUM while adding about 37,000 more products to the mix.
Solid investment market performance accounted for much of the FUM growth but “worldwide net sales of regulated funds have totaled [US]$20.1 trillion” over the 10 years to the end of 2021, the ICI report says.
Despite holding almost half of the global fund market as per FUM, the US only represents 8 per cent of the 131,808 products captured in the ICI survey.
By contrast, Asia-Pacific funds manage 14 per cent of the global total FUM but account for close to 30 per cent of the market as measured by product numbers.
“… while the Asia-Pacific region had only 14 percent of the worldwide total net assets of regulated funds at year-end 2021, the market has been growing,” the ICI study says. “And given the size of the population and the rapidly increasing economic development and wealth in many countries there, the region’s regulated fund market has potential for continued growth.”
The report says countries with strong equity markets also typically have well-developed regulated fund industries.
Australia has by far the largest proportion (about 160 per cent) of assets in regulated funds as measured against GDP, the ICI study shows: only the US and the Netherlands have fund-GDP ratios above 100 per cent.
NZ regulated funds equate to about 40 per cent of GDP, putting the country close to par with Norway, Japan and Austria.
“Research indicates that the size of the regulated fund market in a country or region is a reflection of a broad range of factors, including access to well-developed capital markets, household demand for well-diversified investments, strong and appropriate regulation of funds and financial markets, availability of distribution structures that facilitate access to regulated funds, returns and costs of regulated funds relative to other available investment products, demographics, and high or improving levels of economic development,” the ICI paper says.
The 262-page report also documents the surge of money flowing to ETFs and passive funds in general.
“At year-end 2021, index mutual funds and index ETFs together accounted for 43 percent of assets in long-term funds, up from 21 percent at year-end 2011,” the study says. “Nevertheless, actively managed funds still accounted for the majority of long-term fund assets (57 percent) at year-end 2021.”
The US-based ICI, which also has a global arm, focuses on the regulated fund sector.
“Such funds are typically regulated with respect to disclosure; the form of organization (for example, as either corporations or trusts); custody of fund assets; minimum capital; valuation of fund assets; and restrictions on fund investments, such as limits on leverage, types of eligible investments, and diversification of portfolio investments,” the report says.
Now in its 62nd edition, the ICI annual ‘Fact Book’ provides reams of data on industry trends but with much of the detail centred on the US market.
Eric Pan, ICI chief, said in a release: “For those involved in the day-to-day work of the investment fund industry, this Fact Book has all the information needed to understand and analyze the current state of the industry and what the near future could look like as we advance our regulatory and policy priorities.”