US funds still dominating the industy
AMERICA’S fund management industry is alive and kicking despite being buffeted by two recessions in the past decade, a leading funds guru said yesterday.
Todd Ruppert, chief executive and president of T Rowe Price Global Investment Services, told a conference of asset managers that the US fund industry was gathering strength.
He pointed out that while Asia and Europe had seen most fund flows between 2006 and 2008 directed to new funds, the majority in the US had been to existing ones, which he said was a “very positive differentiator” between America and the rest of the world.
While Europe saw more than 11,000 new funds launched between 2000 and 2008, the US saw the figure decline, which Ruppert said was healthy due to the lower expenses enjoyed by larger funds.
Ruppert also highlighted the impact on fees of America’s landscape of larger funds.
“Fees have declined rather consistently, and will continue to do so, due to factors including economies of scale, more transparent disclosure, increased competition, the media and government’s focus on fees, and consumer education.”
And he said that while 2008 had seen net outflows from long-term funds for the first time in 20 years, inflows from April to August 2009 had seen all of those outflows recouped.
Year-to-date inflows were $275bn, he said, with inflows rising for 27 consecutive weeks as of 16 September.
The US remained the world’s largest mutual fund market by some distance, with 51 per cent of the market compared to Europe’s 33 per cent and a combined 11 per cent for Africa and the Asia Pacific region.
The US industry has $9.6 trillion in assets under management and more than 92m shareholders.
It is also the most diverse, Rupert said, with ownership split between banks, insurers, securities firms and independent managers.
Ruppert identified a growing trend for defined benefit pension plans to shift their allocations from equity to bonds, after they were spooked by recent volatility in global equity markets.