Worldwide Mutual Fund Assets Top $17 Trillion in 4Q05

May 11, 2006 ( - Worldwide mutual fund assets reached $17.77 trillion at the end of fourth quarter 2005, according to data from the Investment Company Institute (ICI).

Assets increased 2.8% or $287 billion, ICI reports. For the year as a whole, net cash flow to all funds worldwide was more than double that of inflows in 2004.

Growth in assets reported in US dollars was muted due to the appreciation of the dollar. For example, ICI said, mutual fund assets in Europe on a Euro-denominated basis increased 3.5%, compared with 1.4% on a US-dollar-denominated basis.

On a US-dollar-denominated basis, mutual fund assets increased in the fourth quarter in all investment categories except bonds. The largest increase occurred in worldwide assets of equity funds, which reached $8.3 trillion at the end of the fourth quarter of 2005, a growth of 4.8%. Money market fund assets increased 2.6%, holding $3.4 trillion worldwide at the end of the fourth quarter, while assets of balanced/mixed funds grew 2.1%.   Bond fund assets fell 2% to $3.4 trillion worldwide.

Long-term funds had fourth quarter net inflows of $206 billion, with equity funds’ inflows nearly double that of the prior quarter ($163 billion v. $87 billion).   Equity fund inflows were strong worldwide, with the Americas reporting net inflows to equity funds of $68 billion, Europe reporting net inflows of $57 billion, and the Asia/Pacific and African regions accounting for $38 billion.

Balanced fund flows were down slightly in the fourth quarter, slowing to $35 billion compared with $37 billion in the third quarter.

M oney market fund inflows reached $81 billion worldwide, primarily due to sizeable inflows in the US. This was the second quarter of positive net cash flow following a two-and-a-half year period of primarily net outflows, according to ICI data. The US accounted for the inflow for the period, with an increase of $109 billion. Europe registered an outflow of $21 billion after registering an inflow of $19 billion in the third quarter. The Asia/Pacific and African regions reported outflows of $6 billion in the fourth quarter.

For bond funds, worldwide outflows equaled $14 billion (€12 billion). Net inflows to bond funds in the Americas were $13 billion in the fourth quarter, however, Europe experienced outflows of $19 billion.

At the end of the fourth quarter of 2005, 47% of worldwide mutual fund assets were in equity funds. The asset share of money market funds and bond funds were 19% each. Balanced/mixed fund assets held 9% of the total.

By region, 55% of worldwide assets were in the Americas in the fourth quarter of 2005, 34% were in Europe, and 11% in Africa and Asia/Pacific.