The Hindu Business Line : Global MFs' asset remains flat

Did you know that there are more than 54,000 mutual funds in the world? Or that at the end of the first quarter of 2005, assets of equity funds represented 45 per cent of all mutual fund assets internationally? Or that the contribution of Asia-Pacific and Africa is still abysmally low when compared to that of the developed world?

These, and more, are interesting trivia for mutual fund aficionados. To know more, check out the latest report issued by Investment Company Institute (ICI), the body formed by all asset management outfits in the US.

The report, just out, pegs mutual fund assets worldwide at $16 trillion at the end of the first quarter of 2005. This, ICI says, is about the same as what was recorded at the end of 2004. Globally, long-term funds witnessed higher collections, chiefly triggered by robust bond inflows in Europe. Outflows from money market funds increased a bit in Q1, especially so in the US.

The ICI compilation is, incidentally, on behalf of the International Investment Funds Association, an organisation of many national mutual fund associations. The details pertaining to Q1 has data from 41 countries.

"Despite positive stock market performance in more than three-quarters of reporting countries and ongoing net cash flow, mutual fund assets worldwide were little changed in the first quarter of 2005, in part because of essentially flat stock market performance in the US and because growth in assets reported in US dollars was muted due to the appreciation of the dollar", ICI has noted.

Worldwide, equity funds had $7 trillion, essentially unchanged from end-2004. Net inflows into equity funds were $103 billion, compared with $100 billion in the fourth quarter.

The figure for bond funds more than doubled from their fourth quarter pace to $99 billion. Money market fund assets fell 1.9 per cent in Q1, with modest net outflows of $21 billion.

Interestingly, at the end of the quarter, equity funds represented 45 per cent of the worldwide assets. Money market funds and bond funds accounted for 21 per cent and 20 per cent respectively. The Americas had as much as 55 per cent the aggregate assets, while Europe and Africa/Asia contributed to 35 per cent and 11 per cent respectively.

For the record, the number of funds worldwide stood at 54,702. By classification, 42 per cent were equity funds, 24 per cent bond funds, 20 per cent balanced/mixed funds, and 7 percent money market funds.

Incidentally, retirement assets invested in mutual funds had reached a record $3 trillion in 2004, ICI's annual report on the US retirement market had earlier stated. Assets in individual retirement accounts (IRAs) and defined contribution plans, the two largest components of this market, continued to move ahead of other types of retirement plans.

The 2004 survey also found that investors were saving on their own and through employer-sponsored defined contribution plans; they were increasingly opting for "lifestyle and lifecycle funds" - which has resulted in a rapid growth of such funds over the past several years.

Four out of 10 US households owned IRAs. "As impressive as these numbers are, policymakers are definitely on the right track in their efforts to encourage automatic enrolment of workers into employer-sponsored retirement plans and to offer them a broader array of long-term investment choices", ICI mentioned.

Feedback may be sent to nilanjan@thehindu.co.in

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