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Mutual fund hot spots | Maps that tell the story

August 12, 2011

You’re a mutual fund marketing executive, and you’re planning your firm’s global strategy. You want to focus your budget dollars on the countries with the best prospects for growth.

Here are two maps that illustrate the tradeoffs you’ll need to make. Both of them look at growth in assets over a 2-year period – from the end of 2008 to the end of 2010 – using Investment Company Institute data.

Highest Growth Rates

The first map shows percentage growth rates by country. Countries with the highest percentage growth in assets are shown in red. Those with the next-highest growth rates are dark orange. Growth rates continue to decline as colors move from light orange to yellow and then to green. Countries in green actually saw declines in assets. No data was available for countries in gray – most have very small fund markets. (Click on the map if you want to take a closer look.)

Observations:

  • Growth was generally good throughout the world during this period.
  • Growth appears weakest in Europe – but the large amount yellow and green is misleading. While growth over the entire region was strong, there were significant shifts within Europe. Local fund markets in Greece, Italy and Spain saw outflows, but funds in the international financial centers of Ireland, Luxembourg and the United Kingdom experienced strong gains. (Luxembourg’s land area is so small that it can’t be seen on this map.)
  • China’s growth was good, but not the highest.

Which country wins for highest growth rate? Romania, with a 425% gain over the 2 years.

But would you direct a large portion of your firm’s marketing budget to Romania? Of course not – and the second map shows why.

Biggest Dollar Gains

This second map shows the increase in assets in absolute dollar terms – equal to assets at the end of 2010 less assets at the end of 2008. It uses the same color scale as the first map, so that countries with the biggest gains in assets appear in red, while those with asset declines are in green.

Size matters in this map. The world’s largest fund market, the United States, is the clear winner in this map with a $2.2 trillion increase in assets. Romania manages only a sickly shade of yellow; that spectacular gain was off a very small base.

Key takeaways:

  • The developed world dominates the fund business – even with all the recent gains in emerging markets. To get a sense of the dominance of a few key markets, take a look at this infographic: 2010 World Mutual Fund Assets .
  • Brazil is the most important emerging market. It’s sizable – almost $1 trillion in assets – and it’s growing fast, doubling in size in 2 years. Want to learn more about the Brazilian fund market? Listen to the archive of a NICSA webinar on the topic. (Free to NICSA members.)
  • India and China are doing well, but they’re not leaders . . . at least not yet.

For more on the global fund industry, pick up our book – The Fund Industry: How Your Money is Managed by Robert Pozen and Theresa Hamacher.

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