Globalisation and the Global Growth of Long-Term Mutual Funds
Year: 2014
Type: preprint
Abstract: Around the globe, the mutual fund industry has seen strong growth in assets in the past two decades. Global assets in mutual funds increased from $4.0 trillion in 1993 to $28.9 trillion in September 2013, reflecting increases in each of four broad regions: the United States, Europe, Asia-Pacific, and the rest of the world. An array of factors helps explain the worldwide growth in long-term mutual fund assets and the varied growth experiences across individual countries. These factors include strong and appropriate regulation; investors’ demand for professionally managed, well-diversified products offering access to capital markets; deep and liquid capital markets within a given country; favourable returns on capital market instruments; a country’s economic development, demographics, and fiscal balance; and whether a country has a defined contribution plan system that allows plan participants to invest in mutual funds. Mutual funds become an increasingly important financial intermediary as a country’s economy develops. A cross-country statistical analysis shows that the ratio of long-term mutual fund assets to gross domestic product tends to grow as a country’s per capita income rises, its stock market capitalisation and turnover increase, and the size of its defined contribution assets relative to GDP rises.
Source: SSRN Electronic Journal
Author: Laurent Plantier
Institution: United Services Automobile Association
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1488408501