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New Tiburon Research Report - Mutual Funds
Tiburon Strategic Advisors, a market research & strategy consulting firm serving a wide variety of financial institutions and investment managers, is pleased to announce the release of its newly updated research reports on the Mutual Funds industry. This reports provide comprehensive overview for industry executives seeking a historical top down perspective of mutual funds, their markets & distribution channels, and future predictions.
Mutual Funds
 Please click the image above to view the table of contents for Tiburon's newly updated Mutual Funds Research Report |
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The $10.8 trillion mutual funds industry deserves an encyclopedic review and this is it. This report addresses data flows, trends in product development (e.g., lifestyle funds, socially conscious funds, mutual funds with hedge fund strategies), pricing parameters (e.g., share classes, mutual fund wrap programs, performance fees), and distribution channels (e.g., wirehouses, mutual fund supermarkets, fee-only financial advisors, independent reps, international markets).
This is Tiburon's third effort at putting its views regarding this huge market into a single report, with each subsequent revision getting more thorough. Tiburon’s first draft of this report was published in 2005; that draft was a relatively quick effort at compiling information on a very large market. The second draft of this report focused on fleshing out the history chapter, adding structure to the appendix, adding significant detail to a handful of large mutual fund companies’ profiles in the appendix, and reformatting the underlying Power Point pages. This third draft of the report focuses on further tightening the story, incorporating research from other Tiburon efforts, and adding significant detail to the appendix profiles of the 300 relatively smaller mutual fund companies.
There are three core sections for this third draft. The first section aims to explain the evolution of the mutual funds industry, the second section outlines mutual fund markets & distribution channels, and the last section addresses Tiburon's predictions for the mutual funds industry.
Key Highlights
This report has a long list of interesting facts to share:
The Evolution of the Mutual Funds Business
This section of the report discusses the history of the mutual funds industry, including the roots of the industry and focusing on recent history, the development of current market conditions, and the distribution of assets among current mutual fund companies:
- There are 641 mutual fund companies, an increase of over 40 since 2005
- There are nearly 8,000 open-end mutual funds, 5% less than the peak number in 2002
- Over ninety million individual investors own mutual funds, up 5% since 2000
- There are over 265 million mutual fund shareholder accounts, up hugely especially in the 1990s
- Open-end mutual funds assets under management are over $9 trillion
- Mutual fund industry assets under management grew steadily throughout the 1980s and 1990s before hitting a bump in 2002, but subsequently have continue on this growth trajectory
- Collectively, mutual funds, unit investment trust, exchange traded funds, variable annuities, and non-US mutual funds account for $24.6 trillion global mutual fund assets under management
- Mutual funds, closed-end funds, unit investment trusts, exchange traded funds, & variable annuities net flows have been significantly lower in recent years
- Mutual funds industry profits on stock funds alone top $25 billion
- Open-end mutual funds dominate the mutual funds industry, accounting for over 90% of all mutual funds
- The top five mutual funds companies grab nearly 90% of net sales, up over 100% in the past 10 years
- Mutual funds redemption rates have decreased 25%, after spiking in 2002
- The mutual funds industry collects over $10 billion in 12b1 fees annually
- Two-thirds of mutual fund parent companies have less than $1 billion assets under management
- Vanguard Group, Fidelity Investments, and American Funds are the largest mutual fund companies in terms of assets under management
Mutual Funds Markets & Distribution Channels
This section reviews the primary means by which mutual funds are distributed, including the retail channel (direct to consumer distribution and mutual fund supermarkets), full-service brokers, independent advisors, and other captive advisors like banks and insurance companies:
- Defined contribution plans & retail channels are becoming the distribution sources of choice for mutual fund companies and separate account managers
- After reaching a peak of just over 40% in 1993, the direct retail channel now accounts for less than 20% of retail net mutual fund flows, down by 35% in less than ten years
- Mutual fund supermarkets contain $600 billion assets under management
- Together, Fidelity Investments and The Charles Schwab Corporation control over half of all mutual fund supermarket assets
- 60% of all mutual fund investors are households with $35,000 to $99,999 in annual income
- 83% of all households with income greater than $100,000 own mutual funds
- Nearly half of ultra high net worth investors use an independent advisor as their primary financial advisor
- 56% of high net worth investors use full-service brokers
- Two-thirds of independent representatives put more than half of their assets with one mutual fund company
- Three-quarters of fee-only financial advisers use mutual funds
- Over two-thirds of mutual fund industry assets are in tax deferred retirement accounts like 401ks and individual retirement accounts
- Two-thirds of all mutual fund shareholders own mutual funds either inside only or inside & outside defined contribution retirement plans
Future Predictions for the Mutual Funds Business
This section addresses the future predictions of the mutual funds business. The mutual funds business will experience moderate industry growth, evolving distribution channels, evolving wholesaler models, renewed product innovations, and other changes: 
- The number of mutual fund companies will increase to 800 by 2012, up from 641 in 2006
- The number of mutual funds will grow to 9,000 by 2012, up from 7,929 in 2006
- Mutual fund assets will increase to over $16 trillion by 2012, up from $10.4 trillion in 2006
- Mutual fund net flows will increase to $160 billion by 2012, up from $100 billion in 2006
- Mutual fund companies assets will slowly shift to be driven by the independent advisors & retirement markets, where retail & full service brokers markets will decline in importance
- Mutual fund company net flows have already shifted to the independent advisors & retirement markets
- Mutual fund assets under management will continued to be acquired by the top 20 mutual funds
- The number of mutual fund company mergers & acquisitions will likely hold steady or slight increase
To better understand the developments in the mutual funds industry, executives can purchase Tiburon's Mutual Funds research report where the key learnings highlighted above are covered in greater detail. Please contact Brian Cotter at BCotter@TiburonAdvisors.Com.
More Information
The following links will open specific pages on Tiburon's web site:
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Tiburon Strategic Advisors
Tiburon Strategic Advisors, based in Tiburon, CA, was formed in 1998 to offer market research & strategy consulting services to all types of financial institutions and investment managers:
- The firm has served almost 300 corporate clients and completed almost 1,000 projects since its founding, and today, its knowledge base includes mutual fund distribution, separately managed account programs, alternative investments, wealth management, insurance products, banking services, the fee-only financial advisor market, the CPA firm market, the family office market, and various international markets.
- Tiburon holds a series of CEO Summits semi-annually for its executive-level clients. The next CEO Summit is scheduled for October 9-10, 2007 at the Ritz Carlton Hotel in San Francisco, CA. 2008-2009 dates are April 10-11, 2008 (New York, NY), October 14-15, 2008 (San Francisco, CA), April 9-10, 2009 (New York, NY), and October 7-8, 2009 (San Francisco, CA). Attendance is by invitation only and attendance at each Summit is limited to 100 senior industry executives. Visit the CEO Summits section of Tiburon's web site for details on current and past CEO Summits, including attendee lists, meeting agendas, and highlights. Please contact Tiburon's Managing Principal Chip Roame at CRoame@TiburonAdvisors.Com or (415) 789-2541 if you are a Tiburon client and have an interest in attending a future Tiburon CEO Summit.
- Tiburon offers thirteen online business benchmarking tools that are available to all types of financial advisors in an effort to help them benchmark their business practices and build more successful businesses. The sites include www.BrokerBestPractice.Com for wirehouse & regional brokers, www.FABestPractices.Com for fee-only financial advisors, www.IndependentRepBestPractices.Com for independent reps, and www.PrivateBankerBestPractices.Com for private bankers. Almost 5,000 advisors have used these tools. By completing one of the online surveys, financial advisors can access a FREE copy of the relevant comprehensive Tiburon research report, which summarizes and analyzes the collective results.
- Tiburon has published twenty-six ~300-400+ page research reports, which offer detailed analyses of growing business segments; each is available for $5,000; these reports can be ordered by contacting Brian Cotter at BCotter@TiburonAdvisors.Com or (415) 789-2546.
- Tiburon's weekly research releases, like this one, are emailed for free to interested industry executives, media representatives, conference planners, and individual financial advisors. Over 40,000 industry executives now receive these releases. Feel free to sign up to receive future research releases at Tiburon's web site (www.TiburonAdvisors.Com) if this release was passed to you by a colleague and you would like to receive them directly in the future.
- Tiburon plans to expand its workforce in 2007 and 2008. New research managers will develop proprietary research content for Tiburon research reports and client projects and new marketing managers will enhance the firm's web site, weekly research releases program, and the firm's relationships with media representatives, conference planners, and its clients & executive program members. The firm is also seeking to add a research president, principal candidates, and possibly a chief consulting officer in 2007 or 2008.
- Tiburon has built three executive programs (CEOs-in-Residence, Financial Advisor Roundtable, and Consulting Fellows) in an effort to bring the experiences of additional senior level industry executives to Tiburon clients. Feel free to contact any of the members of Tiburon's executive programs directly or ask that they be included in any ongoing Tiburon project.
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