While the recent sharp fall in local mutual fund assets might not be encouraging, we are going places globally. As of December 31, 2009, the Indian mutual fund industry ranks 17th in terms of assets under management, up five notches from its 22nd ranking a year before.
During the year, India?s MF assets raced past those of Austria, Belgium, Denmark, Netherlands and South Africa. Global MF assets grew 2.3% to $22.9 trillion in 2009.
Luxembourg, France and Australia had close to $1 trillion each in assets. The mature US mutual fund industry was way ahead in terms of assets under management: it held $11 trillion in assets while Luxembourg stood high, thanks to its tax haven status.
India?s improved ranking, to a major extent, is the result of the relative sharp run in its local equity market, which pushed up its assets under management. In terms of asset mix though, US, China, Japan, Canada and Japan had a much higher component of equities in their overall assets, indicating the level of maturity in those markets. For Japan, the equity mix was as high as 82% of overall assets, while it was 45% for US, 57% for China, 39% for Canada and 38% for Australia. In India, equities comprised just 25% of overall assets. On an overall basis, 39% of global assets were in equities, followed by money markets (23%), bond funds (20%) and balanced funds (10%).
?Some BRIC countries like Brazil and China are far ahead in terms of assets. MF assets there as a percentage of GDP are much higher than that of India? says Ved Prakash Chaturvedi, managing director, Tata Mutual Fund. He hinted that India has a lot to catch up. While China had assets of $380 billion, it was $784 billion for Brazil. MF assets constitute just 14% of India’s GDP.
In 2008, when the Lehman Brothers bankruptcy roiled the financial markets, there was a sharp fall in equity markets globally. This affected overall global assets under management. It fell a whopping 28% to $18.9 trillion in December 2008. But ever since, the assets have increased consistently for the whole of 2009. While the rise in equity NAV improved assets to some extent, net sales also increased for long-term equities, bonds and balanced funds for the last three quarters of 2009 as against redemptions witnessed in the previous quarters. The global mutual fund assets data was compiled by The Investment Company Institute on behalf of International Investment Funds Association, an organisation of national mutual fund associations. The collection for the fourth quarter of 2009 includes statistics from 44 countries.