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ICI GLOBAL
RESEARCH PERSPECTIVE
LONDON | HONG KONG | WASHINGTON, DC
MARCH 2014
EXECUTIVE SUMMARY
Globalisation and the Global Growth
of Long-Term Mutual Funds
Over the past two decades, the global mutual fund industry has boomed. Assets in mutual funds have
increased more than seven fold, from US$4.0 trillion in 1993 to US$28.9 trillion in 2013:Q3. This growth
was shared across broad regions of the world. Assets in US mutual funds rose nearly 600 percent to
US$14.3 trillion. The European mutual fund industry, though smaller, grew faster—by almost 620 percent
to almost US$9.0 trillion. Assets in the Asia-Pacific region expanded 463 percent to US$3.3 trillion. Finally,
assets in the rest of the world, which includes Canada, Brazil, and other countries in Latin America, grew
2,419 percent to US$2.3 trillion.
‘Globalisation and the Global Growth of Long-Term Mutual Funds,’ ICI Global’s new research paper,
provides a broad overview of the growth in the assets, number, and types of long-term mutual funds in
regions and countries around the world. The paper’s statistical analysis shows that economic and financial
sector development are key drivers of a country’s long-term mutual fund assets. It also shows that
countries that have defined contribution (DC) plan systems allowing participant-directed investments—
including in mutual funds—tend to have larger long-term mutual fund industries.
Strong, appropriate regulation is fundamental to fund development. And though many influences exist,
three factors are especially critical to the development of mutual funds as a savings tool.
»» A country’s economic development, as measured by per capita income
»» Deep and liquid capital markets
»» Investor use of DC plans as part of their retirement savings
KEY FINDINGS
»» Around the globe, the mutual fund industry has seen strong growth in assets in the past two
decades. Global assets in mutual funds increased from $4.0 trillion in 1993 to $28.9 trillion in
September 2013, reflecting increases in each of four broad regions: the United States, Europe,
Asia-Pacific, and the rest of the world.
Key findings continued on the next page
»» An array of factors helps explain the worldwide growth in long-term mutual fund assets and the varied growth
experiences across individual countries. These factors include strong and appropriate regulation; investors’
demand for professionally managed, well-diversified products offering access to capital markets; deep and liquid
capital markets within a given country; favourable returns on capital market instruments; a country’s economic
development, demographics, and fiscal balance; and whether a country has a defined contribution plan system that
allows plan participants to invest in mutual funds.
»» Mutual funds become an increasingly important financial intermediary as a country’s economy develops. A crosscountry statistical analysis shows that the ratio of long-term mutual fund assets to gross domestic product tends to
grow as a country’s per capita income rises.
»» Mutual fund markets in developing countries have the potential to grow rapidly as their populations mature, their
middle classes expand, and investors better understand and desire the benefits of domestic and international
diversification that mutual funds can provide. Wealth and income are expected to rise substantially in developing
countries such as China, implying that mutual fund assets have the potential to grow considerably.
The full ICI Global Research Perspective is available at www.iciglobal.org/pdf/icig_per01-01.pdf.
FIGURE 1
Fund Use Increases with Per Capita Income
2012
Long-term mutual fund assets as a percentage of GDP
120
R 2=0.44
100
Australia
80
United States
60
Brazil
40
South Africa
United Kingdom
France
Switzerland
Canada
Sweden
Denmark
20
China
0
0
Germany
20
40
Norway
Japan
60
80
100
120
GDP per capita (thousands of US dollars)
Note: Total net asset data for Russia are as of 2011. Data are included for Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada,
Chile, China, Costa Rica, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, India, Italy, Japan, Korea, Rep. of, Mexico,
Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, South Africa, Spain, Sweden,
Switzerland, Taiwan, Trinidad and Tobago, Turkey, United Kingdom, and the United States.
Sources: International Investment Funds Association and International Monetary Fund
2
EXECUTIVE SUMMARY: GLOBALISATION AND THE GLOBAL GROWTH OF LONG-TERM MUTUAL FUNDS | MARCH 2014
FIGURE 2
Countries with Larger Stock Market Capitalisation to GDP Ratios Have Larger Long-Term
Mutual Fund Industry Total Net Assets to GDP Ratios
Percent, December 2012
Long-term mutual fund assets as a percentage of GDP
100
90
Australia
80
70
United States
60
R 2= 0.38
50
Brazil
40
Canada
France
Denmark
30
Korea, Rep. of
Netherlands
10
0
20
40
Switzerland
United Kingdom
South Africa
Austria
20
0
Sweden
60
80
100
Chile
Philippines
120
140
160
180
Stock market capitalisation as a percentage of GDP
Note: Total net asset data for Russia are as of 2011. Data are included for Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada,
Chile, China, Costa Rica, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, India, Italy, Japan, Republic of Korea, Mexico,
Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, South Africa, Spain, Sweden,
Switzerland, Trinidad and Tobago, Turkey, United Kingdom, and the United States.
Sources: International Investment Funds Association and World Bank
FIGURE 3
Assets in Long-Term Mutual Funds Are Related to Defined Contribution Plan Assets
Percent, 2012
Long-term mutual fund assets as a percentage of GDP
100
90
Australia
80
70
R 2=0.32
United States
60
50
Canada
40
Denmark
30
20
New Zealand
Poland
10
0
0
10
20
Chile
30
40
50
60
70
80
90
DC plan assets as a percentage of GDP*
* DC plan assets are a 2011 OECD estimate.
Note: Data are included for Australia, Canada, Chile, Czech Republic, Denmark, Mexico, New Zealand, Poland, Slovakia, and the United States.
Sources: International Investment Funds Association and OECD
EXECUTIVE SUMMARY: GLOBALISATION AND THE GLOBAL GROWTH OF LONG-TERM MUTUAL FUNDS | MARCH 2014 3
FIGURE 4
Cumulative Change in Worldwide Assets of Long-Term Mutual Funds
Billions of US dollars; quarter-end, 2003:Q1–2013:Q3
Return component
Cumulative net sales
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
-2,000
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Note: Net sales is a calculation of total sales minus total redemptions plus net exchanges. Data include home-domiciled funds, except
for the Republic of Korea and New Zealand, which include home- and foreign-domiciled funds. The data exclude Australia, Ireland, and
Hong Kong SAR.
Source: International Investment Funds Association
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