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Mutual Fund Assets Decline Worldwide

By Bob Keane

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In case you didn’t know it already by looking at your clients’, or your own, portfolios, 2008 was one of the worst years ever for stock markets around the world. And as the stock markets go, so for the most part do mutual funds.

According to the January 2009 issue of The Cerulli Edge Global Edition, total U.S. mutual fund assets dropped nearly 20% to $8.97 trillion by the end of 2008′s third quarter from $11.4 trillion the previous year, with year-end numbers expected to be even more dismal.

Results for mutual funds in some nations have been even more disappointing, with some seeing mutual fund asset levels decline by more than half–Russia (-59.4%), Greece (-51.9%)–although on admittedly small bases.

At the same time that the total asset level has dropped, there has been, according to Cerulli, a marked “shift from more complex and expensive equity-linked offerings to simpler, lower margin products such as bond and money market funds.” By the end of the third quarter, money market funds accounted for 39% of all U.S. mutual fund assets and domestic and international equities only 44%. By contrast, a year earlier money market funds accounted for 28% of total mutual fund assets while equity mutual funds accounted for 57% of all mutual fund assets.

Cerulli expects that trend to continue and predicts that “bear market products such as money market and fixed-income funds look set to be the big sellers in 2009.”