The asset management business continues to be very healthy, with $6.5 trillion in assets managed by 630 fund managers, according to a new report from Ernst & Young. The average gross margin of large public advisers is around 37%, according to the report. Redemptions for the average equity fund fell to around 23% in 2003, compared with 31% the previous year.
However, the growth rate in assets under management is expected to drop to between 3% to 5% over the next 10 years, from a 10% to 15% growth rate in the 1990s. Although partially a reaction to market volatility and investor hesitancy, the report said the mutual fund business is approaching saturation, reflected in a decline in the number of funds, the number of classes within funds and funds' ability to penetrate distribution channels.