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2021 Investment Company Fact Book

CHAPTER ONE

Worldwide Regulated Open-End Funds

Investors around the world have demonstrated strong demand for regulated open-end funds (referred to in this chapter as regulated funds). In the past decade, worldwide net sales of regulated funds have totaled $16.5 trillion. This demand has been influenced by several long-term factors as well as cyclical and macroeconomic factors. Fund providers have responded to the increasing interest in funds by offering more than 125,000 regulated funds, which provide a vast array of choices for investors. In many countries, markets for regulated funds are well‑developed and highly competitive. At year-end 2020, regulated funds had $63.1 trillion in total net assets.

What Are Regulated Funds?

The International Investment Funds Association (IIFA) defines regulated funds as collective investment pools that are substantively regulated, open-end investment funds.* Open-end funds generally are defined as those that issue new fund shares (or units) and redeem existing shares (or units) on demand. Such funds are typically regulated with respect to disclosure, the form of organization (for example, as either corporations or trusts), custody of fund assets, minimum capital, valuation of fund assets, and restrictions on fund investments, such as limits on leverage, types of eligible investments, and diversification of portfolio investments.

 

* The primary data source for worldwide regulated funds is the IIFA. In 2020, the IIFA collected data on worldwide regulated funds from 46 jurisdictions. For data on individual jurisdictions, see section 8 of the data tables. For more details about the IIFA data collection, see Worldwide Definitions of Terms and Classifications.

In the United States, however, regulated funds include not only open-end funds (mutual funds and exchange-traded funds [ETFs]), but also unit investment trusts and closed-end funds.* In Europe, regulated funds include Undertakings for Collective Investment in Transferable Securities (UCITS)—ETFs, money market funds, and other categories of similarly regulated funds—and alternative investment funds, commonly known as AIFs.

 

* Data for unit investment trusts and closed-end funds are not included in this chapter; these funds are discussed in chapter 2 and chapter 5, respectively.

In many countries, regulated funds may also include institutional funds (funds that are restricted to being sold to a limited number of non-retail investors), funds that offer guarantees or protection of principal (those that offer a formal, legally binding guarantee of income or capital), and open-end real estate funds (funds that invest directly in real estate to a substantive degree).

Worldwide Total Net Assets of Regulated Funds

Worldwide total net assets of regulated funds have seen robust growth over the past decade across the world. The increase in worldwide total net assets largely reflects an increase in the value of the underlying securities held by the funds. However, over the same period, worldwide demand for regulated funds as measured by net sales—total sales minus total redemptions plus net exchanges—has also been significant. Demand for regulated funds has been driven by, among other factors, investors’ demand for professionally managed and well-diversified products offering access to capital markets and by the increasing depth and liquidity of global capital markets.

In 2020, the COVID-19 public health crisis played a considerable role in shaping global financial markets. Beginning in late February, governments around the world made efforts to control the crisis by imposing public health mandates and social distancing guidelines, which effectively shut down large portions of the global economy. Confidence in financial markets plummeted, and investors around the world sought to preserve and build liquidity. The total return on global stocks sharply declined in the first quarter of 2020, which contributed to a substantial decrease in total net assets of worldwide regulated funds by the end of March 2020. In addition, the surge in demand for highly liquid assets during this period contributed to outflows from regulated funds investing in long-term assets and inflows into funds investing primarily in short-term government securities. As monetary and fiscal policies set by governments stabilized markets in the second quarter of 2020, values in the underlying securities held by worldwide regulated funds steadily recovered through the end of the year, and overall net sales for the year were positive.

Total Net Assets of Worldwide Regulated Funds by Type and Region

Despite the impact that the COVID-19 pandemic had on financial markets during the first quarter of 2020, net assets in worldwide regulated funds increased 14.9 percent for the year, from $54.9 trillion at year-end 2019 to $63.1 trillion at year-end 2020 (Figure 1.1).*

 

* In this chapter, unless otherwise noted, data for total net assets and net sales are denominated in US dollars.

Worldwide total net assets of equity funds—which invest primarily in publicly traded stocks—increased by 15.7 percent, from $24.5 trillion at year-end 2019 to $28.3 trillion at year-end 2020. Bond funds—which invest primarily in fixed-income securities—saw their total net assets increase from $11.8 trillion to $13.1 trillion (10.7 percent) over the same period, and total net assets of mixed/other funds* rose 14.6 percent, from $11.6 trillion at year-end 2019 to $13.3 trillion at year-end 2020. Finally, money market funds—which are generally defined throughout the world as regulated funds that are restricted to holding only short-term, high-quality debt instruments—saw their total net assets increase from $6.9 trillion at year-end 2019 to $8.3 trillion at year-end 2020 (20.0 percent). At year-end 2020, equity funds remained the largest category of regulated funds, accounting for 45 percent of net assets. Bond funds and mixed/other funds each accounted for 21 percent of net assets, and money market funds accounted for the remaining 13 percent of net assets.

 

* Mixed/other funds include balanced/mixed funds, guaranteed/protected funds, real estate funds, and other funds.

FIGURE 1.1

Total Net Assets of Worldwide Regulated Open-End Funds Rose to $63.1 Trillion in 2020
Trillions of US dollars by type of fund, year-end
Figure 1.1

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* Mixed/other funds include balanced/mixed funds, guaranteed/protected funds, real estate funds, and other funds.

Note: Regulated open-end funds include mutual funds, ETFs, and institutional funds.

Source: International Investment Funds Association

Worldwide total net assets of regulated funds also vary widely by geographic region. At year-end 2020, total net assets in regulated funds continued to be predominantly held in the United States and Europe, with 47 percent and 35 percent of the worldwide total, respectively (Figure 1.2). Regulated funds in the Asia-Pacific region held another 14 percent of worldwide total net assets, and funds in the rest of the world held the remaining 5 percent.

Total net assets of worldwide regulated funds in the United States increased by 14.2 percent from $25.7 trillion at year-end 2019 to $29.3 trillion at year-end 2020. Over the same period, total net assets in Europe increased by 15.7 percent to $21.8 trillion, total net assets in the Asia-Pacific region increased by 21.3 percent to $8.8 trillion, and total net assets in the rest of the world increased by 1.1 percent to $3.2 trillion.

FIGURE 1.2

The United States Has the Largest Share of Total Net Assets of Worldwide Regulated Open-End Funds
Trillions of US dollars by region, year-end
Figure 1.2

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Note: Regulated open-end funds include mutual funds, ETFs, and institutional funds.

Source: International Investment Funds Association

The growth in worldwide total net assets of regulated long-term funds in 2020 largely reflected an increase in the value of the underlying assets in which these funds invest. Despite a sharp downturn in the first quarter of 2020, stock market returns around the world were generally positive for the year. In 2020, US stock markets returned 20.8 percent, Asia-Pacific stock markets returned 20.1 percent, and European stock markets returned 5.9 percent (see Figure 1.3). Similarly, global bond markets increased in value in 2020. US bond markets returned 7.7 percent, European bond markets returned 3.6 percent, and bond markets in the Asia-Pacific region returned 1.2 percent.*

 

* As measured by the FTSE US Broad Investment Grade Bond Index, the Bloomberg Barclays Pan-European Aggregate Index (expressed in euros), and the Bloomberg Barclays Asian-Pacific Aggregate Index (expressed in Japanese yen), which all cover investment grade securities.

Exchange rates also played a role in the growth of worldwide regulated fund total net assets in 2020. In particular, the US dollar depreciated against all major currencies in 2020, which increased the value of total net assets in other regions when measured in US dollars. For example, the euro appreciated against the US dollar by 8.9 percent, which would have boosted the value of total net assets in Europe measured in US dollars by about $1.8 trillion when compared with a scenario in which year-over-year exchange rates remained unchanged in 2020. Elsewhere around the world, the Australian dollar appreciated against the US dollar by 9.6 percent, the Chinese renminbi by 6.7 percent, and the Japanese yen by 5.1 percent (see below for more information on how exchange rates can influence measurement of total net assets).

FIGURE 1.3

Stock Market Returns Around the World Were Generally Positive in 2020
Percent
Figure 1.3

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1 The change in the exchange rate of euros is measured as the year-over-year percent change in the exchange rate of US dollars per euro.

2 The total return on US equities is measured as the year-over-year percent change in the Wilshire 5000 Total Market Index.

3 The total return on European equities is measured as the year-over-year percent change in the MSCI Daily Total Return Gross Europe Index (expressed in US dollars).

4 The total return on Asia-Pacific equities is measured as the year-over-year percent change in the MSCI Daily Total Return Gross AC Asia-Pacific Index (expressed in US dollars).

Sources: Bloomberg and MSCI

How Exchange Rates Can Influence Measurement of Total Net Assets Held by Worldwide Regulated Funds

For worldwide regulated funds holding assets denominated in currencies other than US dollars, fluctuations in US dollar exchange rates can significantly affect the value of these assets when they are expressed or measured in US dollars. For example, when foreign currencies appreciate against the dollar (or, equivalently, the US dollar depreciates against foreign currencies), the value of assets not denominated in US dollars will rise when those assets are measured in US dollars. Figure 1.4 illustrates this effect using two hypothetical scenarios.

FIGURE 1.4

Impact of Changes in the Exchange Rate on the US Dollar Value of a European Stock
Scenario 1: No change in exchange rate between euros and US dollars
  Year 1 Year 2 Percent
change
1. Market value of European stock expressed in euros €100 €110 10%
2. Exchange rate of euros (US dollars per euro) 1.00 1.00 0%
3. Market value of European stock expressed in US dollars $100 $110 10%
Scenario 2: Market value if euro appreciates (US dollar depreciates)
  Year 1 Year 2 Percent
change
4. Market value of European stock expressed in euros €100 €110 10%
5. Exchange rate of euros (US dollars per euro) 1.00 1.20 20%
6. Market value of European stock expressed in US dollars $100 $132 32%

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In the first scenario, the market value of a European stock, measured in euros, rises from €100 in year 1 to €110 in year 2, an increase of 10 percent. The exchange rate between US dollars and euros, in this scenario, remains unchanged at 1.00 in both years. In other words, one euro is worth one US dollar in both years. To convert the euro-denominated value of the European stock into US dollars, multiply by the exchange value of the euro (US dollars per euro). Because this value is 1.00 in both years, the value of the European stock expressed in US dollars is the same as when expressed in euros: $100 in year 1 and $110 in year 2. When the US dollar exchange rate with another country is unchanged between two years, any gain or loss in assets denominated in that country’s currency translates into an identical percent gain or loss when the value of those assets is expressed in US dollars.

Exchange rates, however, rarely remain unchanged. In the second scenario, a European stock experiences the same 10 percent gain as in the first scenario (€100 in year 1 to €110 in year 2); at the same time, the euro appreciates 20 percent against the US dollar. As in the first scenario, in year 1 the market value of a European stock expressed in US dollars is $100. In year 2, however, one euro is now worth 1.20 US dollars. To find the US dollar value of the European stock in year 2, multiply €110 by 1.20 (US dollars per euro) to get $132. The US dollar return on the European stock is now 32 percent—higher than in the first scenario because it accounts for the appreciation of the euro relative to the US dollar.

Worldwide Net Sales of Regulated Long-Term Funds

Worldwide demand for regulated long-term funds (equity, bond, and mixed/other) decreased slightly in 2020, from $1.5 trillion in 2019 to $1.3 trillion in 2020, primarily because of decreased demand for regulated funds in the United States (Figure 1.5). Net sales of long-term funds in the United States decreased from $531 billion in 2019 to $274 billion in 2020, but increased in Europe, from $473 billion to $497 billion, and in the Asia-Pacific region, from $345 billion to $469 billion. Worldwide net sales for the rest of the world decreased slightly, from $115 billion in 2019 to $102 billion in 2020. 

FIGURE 1.5

Net Sales of Regulated Open-End Long-Term Funds Decreased in 2020
Billions of US dollars by region, annual
Figure 1.5

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Note: Regulated open-end funds include mutual funds, ETFs, and institutional funds. Long-term funds include equity funds, mixed/other funds (balanced/mixed, guaranteed/protected, real estate, and other funds), and bond funds, but exclude money market funds.

Source: International Investment Funds Association

Worldwide net sales of equity funds increased from $66 billion in 2019 to $140 billion in 2020 (Figure 1.6); net sales were concentrated in the fourth quarter of 2020. In November, news surrounding positive vaccine results appeared to sharply boost returns of stock markets around the world, which may have contributed to the large inflows that equity funds received during the quarter. Aside from the United States, the other regions contributed to the increase in equity fund investment in 2020, with combined inflows increasing from $115 billion in 2019 to $412 billion in 2020. This was partially offset by outflows of $272 billion from regulated equity funds in the United States in 2020—likely affected by portfolio rebalancing to maintain target allocations among equity and bond funds.

FIGURE 1.6

Worldwide Net Sales of Regulated Open-End Bond Funds Fell in 2020
Billions of US dollars by type of fund, annual
Figure 1.6

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* Mixed/other funds include balanced/mixed funds, guaranteed/protected funds, real estate funds, and other funds.

Note: Regulated open-end funds include mutual funds, ETFs, and institutional funds.

Source: International Investment Funds Association

While equity funds globally saw an increase in net sales in 2020 compared with 2019, net sales of bond funds slowed from $1.0 trillion in 2019 to $729 billion in 2020 (Figure 1.6). The COVID-19 pandemic partly contributed to this decline, as investors and other market participants, especially during the first quarter of 2020, sought safe, liquid, short-term assets, such as money market funds. However, demand for bond funds was still relatively strong in 2020, which likely reflected a continuing global demographic shift of aging populations (see next paragraph), positive returns on bonds, and portfolio rebalancing, as returns on global stocks outpaced returns on bonds. The United States, Europe, and the Asia-Pacific region all experienced positive demand for bond funds in 2020. In the United States, net sales of bond funds were $552 billion in 2020, down from $581 billion in 2019; in Europe, net sales were $122 billion in 2020, down from $311 billion in 2019; and in the Asia-Pacific region, net sales were $58 billion in 2020, down from $124 billion in 2019. The rest of the world experienced outflows from bond funds of $4 billion in 2020 compared with inflows of $13 billion in 2019.

Combined net sales of bond funds and mixed/other funds have generally been strong over the past decade, usually outpacing net sales of equity funds. This trend continued in 2020 (Figure 1.6), which can partially be explained by the aging of the global population. In 2020, individuals aged 50 or older were estimated to represent 24 percent of the world’s population, up from 21 percent in 2010.* As investors near retirement reassess their tolerance for investment risk, they might elect to weight their purchases more toward regulated funds with less-variable returns. Because returns on bonds tend to be less variable than those on stocks, returns on bond funds and some mixed/other funds that hold substantial proportions of their total net assets in bonds also tend to be less variable than those of equity funds.

 

* United Nations, Department of Economic and Social Affairs, Population Division (2019). World Population Prospects (2019 Revision). Available at https://population.un.org/wpp/.

Ongoing Charges for UCITS in the European Union

The UCITS Directive has become a global success story since its adoption in 1985. Net assets in UCITS increased from €10.4 trillion at year-end 2019 to €11.0 trillion by year-end 2020. Investments in these funds are held by investors in Europe and other jurisdictions worldwide.

UCITS provide many important advantages to European investors, including professional management services, access to global markets, the benefit of regulation and supervisory oversight, and access to a wide array of investment options via “passporting”—meaning that a UCITS established in one country can be sold cross-border into one or more other countries.

UCITS investors incur ongoing charges that cover a host of services, including portfolio management, administration, compliance costs, accounting services, legal costs, and payments to distributors. The total cost of these charges is disclosed to investors through either the total expense ratio (TER), often found in a UCITS’ annual report and other marketing documents, or the ongoing charges figure (OCF), found in the Key Investor Information Document (KIID). Ongoing charges among UCITS vary, and these differences depend on a variety of factors. Because ongoing charges are paid from fund assets, investors pay for these investment-related services indirectly.

On an asset-weighted basis, average ongoing charges paid by investors in equity and fixed-income UCITS have decreased since 2013, while ongoing charges for mixed funds have remained relatively stable (Figure 1.7). In 2013, asset-weighted average ongoing charges for equity funds were 1.49 percent, or €1.49 for every €100 in assets. By 2019, the asset-weighted average had fallen to 1.24 percent. Asset-weighted average ongoing charges also declined for fixed-income funds, from 0.98 percent in 2013 to 0.78 percent in 2019. Asset-weighted average ongoing charges for mixed funds, which invest in a combination of equity and fixed-income securities, were 1.45 percent in 2013 compared with 1.41 percent in 2019.

In each year from 2013 to 2019, the asset-weighted average ongoing charges for equity, fixed-income, and mixed funds were below their respective simple averages, illustrating that investors tend to concentrate their assets in lower-cost funds. For example, the simple average ongoing charge for equity funds was 1.48 percent in 2019 compared with an asset-weighted average of 1.24 percent. For fixed-income funds, the simple average was 1.02 percent compared with an asset-weighted average of 0.78 percent; and for mixed funds, the simple average was 1.47 percent compared with an asset-weighted average of 1.41 percent.

FIGURE 1.7

Investors in UCITS Pay Below-Average Ongoing Charges
Percent
Figure 1.7

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* Mixed funds invest in a combination of equity and fixed-income securities.

Note: Data exclude ETFs.

Source: Investment Company Institute tabulations of Morningstar Direct data. See ICI Research Perspective, “Ongoing Charges for UCITS in the European Union, 2019.”

Worldwide Net Sales of Money Market Funds

Worldwide net sales of money market funds in 2020 totaled $1.3 trillion, compared with net sales of $706 billion in 2019 (Figure 1.8). The majority of inflows into money market funds in 2020 occurred in the United States, where money market funds saw inflows of $700 billion. However, the majority of the growth in net sales of money market funds came from Europe and the Asia-Pacific region. In Europe, money market funds experienced inflows of $250 billion in 2020, up sharply from $70 billion in 2019, and Asia-Pacific money market funds received $302 billion in inflows in 2020, a significant increase from $30 billion in 2019. The rest of the world received $43 billion in net sales in 2020, more than double the $20 billion in 2019.

Investors use money market funds because they are professionally managed, tightly regulated vehicles with holdings limited to high-quality, short-term debt instruments. As such, they are highly liquid, attractive, cash-like alternatives to bank deposits. Generally, the demand for money market funds depends on their performance and interest rate risk exposure. As the difference between yields on short-term fixed-income securities and yields on long-term fixed-income securities narrows, money market funds tend to experience inflows because investors can reduce interest rate risk without sacrificing much yield by using a fund with a short duration.

As yield curves globally flattened or further inverted during the first quarter of 2020, investors typically would have exhibited a strong demand for short-term assets in general, such as shortterm bond funds and money market funds. However, the increasing expectation of significant economic fallout brought on by the COVID-19 pandemic during the first quarter of 2020 led many investors to seek high-quality, short-term investments to preserve and build liquidity. As a result, government money market funds, especially those that invested in US government securities, were a popular investment.

FIGURE 1.8

Worldwide Net Sales of Money Market Funds Increased in 2020
Billions of US dollars by region, annual
Figure 1.8

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Source: International Investment Funds Association

Factors Influencing Demand for Worldwide Regulated Funds

Research indicates that the size of the regulated fund market in a country or region is a reflection of a broad range of factors, including access to well-developed capital markets, household demand for well-diversified investments, strong and appropriate regulation of funds and financial markets, availability of distribution structures that facilitate access to regulated funds, returns and costs of regulated funds relative to other available investment products, demographics (see here), and high or improving levels of economic development.

Number of Worldwide Regulated Funds

At year-end 2020, fund providers globally offered 126,457 regulated funds, up 3.2 percent from year-end 2019 and a 38.1 percent increase since year-end 2011 (Figure 1.1). In 2020, 46 percent of these funds were domiciled in Europe (Figure 1.9). The Asia-Pacific region accounted for 28 percent of regulated funds, the United States for 8 percent, and the rest of the world for 18 percent. In 2020, 47 percent of regulated funds were mixed/other funds, 34 percent were equity funds, 17 percent were bond funds, and 2 percent were money market funds.

FIGURE 1.9

Number of Worldwide Regulated Open-End Funds
Percentage of funds by region or type of fund, year-end 2020
Figure 1.9

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* Mixed/other funds include balanced/mixed funds, guaranteed/protected funds, real estate funds, and other funds.

Note: Regulated open-end funds include mutual funds, ETFs, and institutional funds.

Source: International Investment Funds Association

Strong Regulatory Framework

The United States and Europe are home to the world’s largest regulated fund industries (Figure 1.2). The relatively large size of the US market is the result of several factors. One is that US-regulated funds have been available in the United States for around 100 years—for example, mutual funds have been available to US investors since the 1920s. Another factor is the strong regulatory framework for securities markets and regulated funds in the United States that was established in the wake of the stock market crash of 1929 and the Great Depression—most notably, the Securities Act of 1933 and the Investment Company Act of 1940. Grounded in this sound framework, investor confidence in securities markets and regulated funds led to steady growth in US-regulated funds’ assets.

In recent decades, US demand has also been fueled by the availability of regulated funds as investment options in tax-advantaged accounts (for example, 401(k) plans), and by a broad and growing availability of fund types that help investors meet their investment goals (for example, ETFs and target date funds). Also, assets of regulated funds in the past decade have been boosted by stock and bond market appreciations and by reinvestment of dividends into funds.

Europe’s regulated fund market has also grown rapidly over the past few decades. One important factor helping to drive this growth is the UCITS regulatory framework, which includes passporting— the ability for funds domiciled in one EU country to be offered for sale and purchased by investors in another EU country. Additionally, many countries outside of Europe, such as in the Asia-Pacific region, allow UCITS to be offered for sale to their citizens. The pooling of assets from investors in a range of countries allows for economies of scale that help to lower the costs of funds to individual investors. The UCITS framework further promotes asset pooling across countries by allowing an individual fund to offer share classes that are denominated in a range of different currencies (for example, euros, US dollars, British pounds sterling) and that are adapted to different tax structures across jurisdictions.

Finally, while the Asia-Pacific region had only 14 percent of the worldwide total net assets of regulated funds at year-end 2020 (Figure 1.2), the market has been growing. And given the size of the population and the rapidly increasing economic development and wealth in many countries there, the region’s regulated fund market has potential for continued growth.

Well-Developed Capital Markets

Demand for regulated funds in a country is positively associated with its level of equity capital market development—that is, its stock market capitalization relative to its gross domestic product (GDP). Residents of countries with more highly developed equity capital markets (higher ratios of stock market capitalization to GDP), such as the United States and members of the European Union, tend to hold a larger share of their household financial wealth in regulated funds.

Figure 1.10 illustrates the relationship between equity capital market development and the size of the regulated fund market (total net assets in regulated long-term funds in a country relative to its GDP) across countries. The horizontal axis measures a country’s equity capital market development; the vertical axis plots the size of the regulated fund market in a given country.

Generally, as stock market capitalization rises relative to GDP, so do total net assets in regulated funds (Figure 1.10). Countries with more-developed equity capital markets—such as the United States, the United Kingdom, the Netherlands, or Switzerland—also tend to have a higher ratio of regulated long-term fund assets to GDP. For example, the Netherlands’ stock market capitalization is close to its GDP (94 percent on the horizontal axis), indicating a highly developed equity capital market, while total net assets in regulated long-term funds are also close to its GDP (106 percent on the vertical axis), indicating a well-developed fund industry. In contrast, countries with less-developed equity capital markets, such as Poland or China, tend to also have lower total net assets in regulated long-term funds relative to GDP.

FIGURE 1.10

Countries with More-Developed Equity Capital Markets Tend to Have More‑Developed Fund Industries
Percent, 2019
Figure 1.10

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* Regulated open-end funds include mutual funds, ETFs, and institutional funds. Long-term funds include equity funds, mixed/other funds (balanced/mixed, guaranteed/protected, real estate, and other funds), and bond funds, but exclude money market funds.

Source: Investment Company Institute tabulations of data from the International Investment Funds Association, Bloomberg, World Bank, World Federation of Exchanges, and Euronext

Other Factors Influencing Demand

Other factors also influence the demand for regulated funds, and therefore, the size of the regulated fund market. For example, in countries where banks have historically dominated the financial landscape, households tend to hold more of their financial assets in bank products and less in regulated funds (Figure 1.11). For example, although Japan’s stock market capitalization is 122 percent of GDP, comparable to that of the United Kingdom, it has substantially less net assets in regulated long-term funds as a proportion of its GDP (38 percent) (Figure 1.10).

Households in Japan hold more than half (54 percent) of their financial assets in bank deposits and currency but very little in regulated funds (4 percent) (Figure 1.11). By contrast, in the United States, banks compete with capital market instruments for households’ financial assets; as a result, households hold a relatively small fraction (13 percent) of their assets in bank deposits compared with 23 percent in regulated funds. European countries are intermediate cases among industrialized nations, with 33 percent of households’ financial wealth in bank deposits and 9 percent in regulated funds. Differences in public policy and tax regimes across countries also likely have contributed to the dispersion of deposits and regulated funds held by households.

FIGURE 1.11

US Households Hold More of Their Wealth in Regulated Funds; Bank-Centric Countries Have a Lower Share
Percentage of household1 financial wealth, selected dates2
Figure 1.10

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1 Households include households and nonprofit institutions serving households.

2 Data for the United States and Japan are as of 2020:Q4; data for the European Union are as of 2020:Q3.

3 For the United States and Japan, regulated funds include mutual funds and ETFs. For the European Union, regulated funds include investment fund shares as defined by their respective systems of national accounts.

Source: Investment Company Institute tabulations of data from the International Investment Funds Association, Federal Reserve Board, Eurostat, and Bank of Japan

Size of Worldwide Regulated Funds in Global Capital Markets

Regulated funds are a growing source of capital for world financial markets, helping to finance businesses, governments, and household activities. As of year-end 2020, worldwide capital markets, as measured by the value of equity and debt securities outstanding, totaled $240.8 trillion, of which regulated funds’ net assets were 26 percent, or $63.1 trillion (Figure 1.12).

The share of worldwide capital markets held by regulated funds has grown over the past decade. In 2011, worldwide regulated funds held 20 percent of worldwide capital markets, rising to 26 percent in 2020. The remaining 74 percent of worldwide capital markets in 2020 were held by a wide range of other investors, such as central banks, sovereign wealth funds, defined benefit pension plans, banks, insurance companies, hedge funds, broker-dealers, and households’ direct holdings of stocks and bonds.

FIGURE 1.12

Worldwide Regulated Open-End Fund Share of Worldwide Equity and Debt Markets
Trillions of US dollars, year-end
Figure 1.12

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* Data for worldwide debt markets are as of September 30, 2020.

Note: Regulated open-end funds include mutual funds, ETFs, and institutional funds.

Source: Investment Company Institute tabulations of data from the International Investment Funds Association, World Federation of Exchanges, and Bank for International Settlements