Mutual fund assets now account for almost one-third, or $4.3 trillion, of the worldwide total of $13.2 trillion managed by the 755 companies in this year's Pensions & Investments directory of money managers.
As of Dec. 31, 1995, mutual fund assets accounted for 28%, or $2.5 trillion, of the total $8.8 trillion of total assets managed internally.
By contrast, mutual funds accounted for only 5%, or $279 billion, of the $5.4 trillion of total assets managed internally as of Dec. 31, 1993, the first year P&I began reporting mutual fund statistics in its annual survey.
Part of the growth of mutual fund assets as a proportion of total assets is undoubtedly due to a slew of new entrants to the field, many of them traditional institutional investment managers, and the emphasis they are giving to mutual funds as part of their business strategy.
In 1994, just 28% or 239 of the 869 firms responding to P&I's survey offered mutual funds. As of year-end 1995, the percentage of mutual fund managers had risen to 39%, or 304 companies of 774. As of year-end 1997, the percentage of mutual fund providers was about the same -- 40%, or 299 firms of a total of 755 responding.
Many of the mutual fund wannabes no doubt are chasing the pot of gold the industry has become during the past decade. Total mutual fund assets under management increased more than 132% in 10 years, to $4.49 trillion as of Dec. 31, 1997 from $316 billion as of Dec. 31, 1987, according to data from the Investment Company Institute, Washington.
But the entrance of so many new players in the past few years has hardly fazed the mutual fund heavyweights, which have had the whole decade to build up their dominance.
Even with the huge growth of the mutual fund industry, the percentage of total assets that is managed in mutual funds has remained remarkably stable for most of the 10 largest providers of mutual funds to the institutional marketplace.
For example, as of Dec. 31, 1987, the largest provider (then and now) of defined contribution plan services and the biggest mutual fund manager, Fidelity Investments, Boston, managed a total of $83 billion, of which $70 billion or 84% was in mutual funds, according to data from P&I's survey. Fidelity reported total assets of $635 billion as of Dec. 31, 1997, and mutual fund assets of $558 billion -- 88% of total assets. Fidelity's money management growth during the past decade in total assets was an astonishing 665%; mutual fund asset growth was an even higher 697%.
The second largest mutual fund manager in the current survey, the Vanguard Group of Investment Cos., Malvern, Pa., also has maintained roughly the same proportion of mutual funds. Of total assets of $27.6 billion as of year-end 1987, 99% was managed in mutual funds. As of the beginning of this year, Vanguard's mutual fund assets of $326 billion represented 94% of total assets under management. Vanguard's total asset growth in the past 10 years was an amazing 1,161%; mutual fund growth was an equally amazing 1,098%.
Capital Research & Management Co., Los Angeles, the third largest mutual fund manager in this year's P&I survey, always has focused on mutual funds sold through intermediaries and doesn't manage assets in other vehicles. The growth over the decade in its assets was 126%, to $244 billion from $18 billion as of Dec. 31, 1987.
Merrill Lynch Asset Management LP, Plainsboro, N.J., the fourth largest mutual fund manager, had growth in total assets of 168% to $220 billion from $82 billion. Mutual fund assets increased 224% to $220 billion from $68 billion as of Dec. 31, 1987. (The 1987 data is from the ICI). In 1988, mutual funds represented 83% of total assets.
At Putnam Investments, Boston, mutual funds were about 78% of total assets in both 1998 and 1988. Total assets under management as of Dec. 31, 1997 were $235 billion; mutual fund assets were $183 billion. At year-end 1987, total assets were $41 billion and mutual funds were $32 billion of that total. Putnam's mutual fund growth was 472% over the 10 years, compared with 473% growth for total assets over that period.
Franklin Resources Inc., San Mateo, Calif., which acquired Templeton International, Fort Lauderdale, Fla., during the past decade and also owns Franklin Advisers Inc., also of San Mateo, has put together a mutual fund powerhouse that has seen huge growth. The combined total assets of the company were $186 billion as of Dec. 31, 1997; $156 billion, or 84%, were invested in mutual funds. In 1997, combined total assets were just $49 billion, of which $39 billion or 80% were managed in mutual funds. Total assets under management rose a healthy 280% since 1988 and mutual fund assets increased 300%. Franklin Resources was the sixth largest mutual fund manager.
T. Rowe Price Associates Inc., Baltimore, started the 10-year period as a fairly small player, with $20 million in total assets and $15 million, or 78%, invested in mutual funds. By Dec. 31, 1997, T. Rowe Price's total assets rose to $156 billion, a 680% increase. Mutual funds as of year-end 1987 totaled $108 billion, or 69% of the company's total assets. Mutual fund growth during the decade was compelling at 620%.
Scudder Kemper Investments Inc., Boston, the result of a merger in 1997 between Scudder, Stevens & Clark Inc. and Zurich Investment Management, also saw reasonable growth during the decade. The two firms managed a combined $81 billion as of Dec. 31, 1987. Mutual funds were $43 billion or 53% of this total. As of year-end 1997, Scudder Kemper managed $215 billion; its $99 billion in mutual funds represented 46% of total assets. Total assets for the combined firm rose 165% over the past 10 years as mutual fund assets increased 130%.