Global Mutual Fund Assets Market Research Report: Forecast (2023-2028)

Market Definition

Mutual Funds (MFs) are termed as a merged collection of money accumulated from a diversified group of investors to invest the collected amount in stocks, bonds, short-term debt, and other securities. By making an investment in such funds, an investor is more likely to enjoy a heterogeneous holding instead of an individual asset; thus, the leverage of automatic investing is unlocked as soon as certain investing criteria are fulfilled.

Since the market coverage is based on Mutual Funds Assets, the assets determine the allocation into three various classes: stock, bond, and short-term or "cash" investments. Along with this, MFs that are merged together as the holdings are acknowledged as its portfolio.

Market Insights & Analysis: Global Mutual Fund Assets Market (2023-28)

The Global Mutual Fund Assets Market is projected to grow at a CAGR of around 11.0% during the forecast period, i.e., 2023-28. As MFs are intended to promote investments by relatively small investors, the market is anticipated to be driven by the rising number of investments to create a better portfolio at a low cost. The other driving factors that will definitely contribute to market expansion include advanced portfolio management services, convenience & fair pricing in terms of investments, and implementation of digitalized technologies.

Apart from this, the global landscape of the mutual fund asset market is on an urge to transform as a whole owing to the rising number of flexible rules and regulations, and initiatives introduced by the government of several countries.

Market Dynamics

Key Driver: Mutual Funds as the Most Preferred Investment Option for Wealth Creation

The rising prominence of investments in mutual funds owing to the compounding potential, easy liquidity, transparency in operations, and low initial investment facilitates the investors' wealth creation, thereby attracting considerable investment worldwide. Moreover, individuals' affinity for such funds has elevated with diversification across assets and reduced risks. Given this, the market has witnessed a tremendous expansion.

During the projected timeframe, it will continue to observe the same trend as MF providers are strengthening the small and large-scale investors and providing them with the best possible lucrative engaging in investment-related plans. Other than this, rising concern towards domestic savings, mobilization, exponential increase in the after-tax income, and other substantial factors are equally considerable for leading the market growth.

Possible Restraint: Unpredictable Environment for the Financial Markets, High Expenditure Proportions, and High Sales Charges

One of the primary challenges for the industry is the highly volatile capital market environment, which has made it difficult for mutual funds to generate attractive returns for their investors consistently. Additionally, high expense ratios and sales charges have made investing in MFs less appealing, as these costs can eat into their returns. As a result, many investors are turning to other investment options, such as exchange-traded funds (ETFs) or individual stocks. To address these challenges, companies must focus on reducing costs, improving performance, and providing more value-added services to attract and retain investors.

Growth Opportunity: Increase in the Initiatives & Support of Government of Different Countries

Government, legislation, and the other regulatory bodies of more than half of the global countries are proactively engaging in the growth of the market by endorsing the numerous lucrative related to the industry and with the assistance of e-wallets, e-commerce distribution platforms, are signing the agreements to establish the mutual funds' sector a mega industry than ever before. Even global distributors are firmly moving ahead with the rising number of initiatives. The projected timeframe will flourish the industry as the several governments aim to intensify the market landscape, ultimately enhancing and building an intense relationship with channel distributors to lead the market to a greater extent.

Key Trend: Advancements of Digitalized Technologies Penetrating the Market

Robo-advisors, artificial intelligence, blockchain, cloud computing, and big data & analytics are just a few of the cutting-edge technology the mutual fund sector has fast adopted in a bid to accelerate the market. Further, MF businesses use such technologies to streamline their methodologies to enhance efficiency, facilitate more straightforward access to sophisticated services, and minimize the costs and risks associated with the mutual fund sector. Customer loyalty has become more significant due to the development of more integrated and value-added services. Deployment and use of digitalized technologies have increased as an outcome, permitting the provision of more effective and practical assistance at fewer expenses for operation, and have greatly aided in the advancement of the global market.

Market Segmentation

By Fund Type

• Equity Funds 
• Bond Funds
• Money Market Funds 
• Hybrid & Other Funds

Out of these, Equity Funds constitute the major segment actively accountable for accelerating the growth of the market. As compared to the others, equity markets facilitate the investors with more leverage and higher investment returns than fixed-income or any other markets. Bond markets are eventually less driven because the Equity or Stock markets have the ability to offer higher gains in terms of capital, due to which it is able to attract a large proportion of the audience, which also promotes them to be taken into consideration, more robust strategic plans before going further in terms of higher investments. As a result, this segment has the optimum probability of improving the Mutual Fund Assets Market share.

By Distribution Channel

• Banks
• Financial Advisors/Brokers 
• Direct Sellers 
• Others

Banks with the potential market share constitute the maximum contribution to promoting the mutual funds' industry of all the distribution channels. The market will undoubtedly witness substantial growth during the projected period owing to the trust, backend support, and other lucrative provided by the Banks time to time. For instance,

• In November 2022, BNP Paribas Mutual Fund successfully accumulated a sum of 1,234 crores which turned out to be the second new fund in the last few months delivered by Baroda BNP Paribas AMC. This multi-asset fund organization started its New Fund Offer (NFO) on the 28th of November and ended on the 12th of December to encourage more people to subscribe.

Moreover, since Financial Advisors/Brokers, Direct Sellers, and others have limited exposure and customer base compared to Banks, the segment has dominated the financial industry and is expected to prevail in the same trend in the coming years as well. In addition, many of them also perform fraudulent activities, so they are not trusted as much as the Banking institutions.

Regional Projection

Geographically, the Global Mutual Fund Assets Market expands across:

• North America
• South America
• Europe
• Middle East & Africa
• Asia-Pacific

Of these, the North American region will lead the market's progression because it holds a strong history of the massive investments initiated in the sector. In fact, more than half of the population residing in the region is a proactive MF investor. This large percentage is hard to be surpassed by any other part for at least a few years. Moreover, since money market funds deliver a high degree of liquidity and some of the best short-term rates in the following area, they likely declare prominent among individuals, companies, and other institutional investors as instruments for cash management, due to which North American residents opt for investing in equities mutual funds to attain higher possible returns on investments. Thus, considering the region's rapid growth rate, the regional landscape can witness a complete evolution by 2028, eventually affecting the Mutual Fund Assets Market size.

Recent Developments in the Global Mutual Fund Assets Market

• In Feb 2023, Morgan Stanley Investment Management announced that it had obtained clearance from the China Securities Regulatory Commission (CSRC) to take an entire controlling stake in Morgan Stanley Huaxin Funds, marking a critical strategic advancement for the company’s broader footprint in China.
• In November 2022, The Vanguard Group, Inc. launched their "Vanguard Global Environmental Opportunities Stock Fund" in the market to attract a global audience for investing purposes. The fund was launched with a structured, research-driven methodology in an effort to drive the global population to establish a low-carbon world.

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