Mutual Fund Management

Mutual Fund Management

Brief Excerpt from Industry Overview Chapter:

Companies in this industry manage the portfolio assets of others on a fee or commission basis. Major companies include American Funds Investments, BlackRock, Fidelity Investments, Franklin Templeton, Invesco, and Vanguard (all based in the US), as well as Investec (South Africa), Old Mutual (UK), and Schroders (UK).

Mutual funds worldwide have about $24 trillion in assets under management. The US is the largest mutual fund market in the world, accounting for about 50 percent of assets. Europe accounts for about 30 percent of mutual fund assets, and Africa and the Asia/Pacific region together account for about 13 percent, according to the Investment Company Institute.

The US mutual fund management industry includes about 650 companies with about $12 trillion in assets under management. High growth is forecast for the next two years. Key growth drivers include increased participation in employee retirement funds.

COMPETITIVE LANDSCAPE

Demand is affected by the growth of retirement capital and returns on alternative investments. The profitability of individual companies depends on investment expertise and effective marketing. Large companies have economies of scale in operations and marketing. Small companies can compete effectively by specializing in desirable sectors and by producing higher investment returns. The US mutual fund industry is concentrated: the 10 largest firms hold more than half of total assets, according to the Investment Company Institute.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services include the initial formation of a mutual fund, sales and redemption of shares, investment advisory services,...