Table of Contents
Introduction and Abbreviations
Introduction
Other relevant reports
Scope of the report
Abbreviations and terms
Abbreviations
Terms
Executive Summary
Maturing, but still the elephant in the room
Some mutual fund segments are growing
Alternative investments -- are they a threat?
Competition in the mutual fund marketplace
What does the consumer think?
What now?
Market Drivers
Mutual Funds: A maturing marketplace?
- Figure 1: Total number of mutual funds,excluding money market funds,
1999-2004
Growth in assets of mutual funds
- Figure 2: Total assets and growth inmutual funds excluding money market
funds, 1999-2004
- Figure 3: Total assets and growth inequity mutual funds vs. S&P 500,
1999-2004
- Figure 4: Total net new cash flows inequity mutual funds, 1999-2004
Impact of market declines
- Figure 5: Assets of load & no-loadmutual funds (equity, hybrid, and
bond funds) 1999-2004
- Figure 6: Index mutual funds, percentageof all mutual funds and
percentage of no-load funds, 1999-2004
One growth segment--lifecycle funds
- Figure 7: Growth in total assets in lifecycle funds and fund of funds,
and percentage of all mutual funds,1999-2004
Socially responsible funds
- Figure 8: Socially responsible fundproducts, total assets and percentage
of all mutual funds, 1999-2004
Growth in alternative investments
- Figure 9: Assets in mutual funds(excluding money market funds), ETFs,
SMAs and hedge funds, 2003 and2005
ETFs--are they taking share from mutual funds?
- Figure 10: ETF assets and compound averagegrowth rate versus mutual
funds, 1999-2004
- Figure 11: Net cash Inflows to mutualfunds & ETFs, 1999 through 2004
SMA Growth: Not much of a challenge yet
- Figure 12: SMA and mutual fund assets,1999-2004
Impact of Hedge Funds and similar alternatives
- Figure 13: Hedge Fund Growth, 1999-2004
Hedge Funds and Pension Plans
Structured notes
Intermediaries and institutional accounts
Competition to lure advisors
Mutual funds in the retirement marketplace
- Figure 14: Mutual fund assets in IRAs anddefined contribution plans, and
percentage of total assets, 1999-2004
Defined contribution plans growing
Retirement plan investors seek advice
Managed accounts within 401(k) plans
401(k)s: Competition from annuities
- Figure 15: Mutual funds and annuities as apercentage of total U.S.
Retirement market assets, 1999-2004
Educational and health savings accounts
- Figure 16: Mutual fund assets in healthsavings and educational savings
accounts, 1999-2004
Pressure on 529 fees
New on the Market: Health Savings Accounts
(HSAs)
HSAs in the Marketplace
New SEC rules for mutual funds
Market Size and Segmentation
Total size of the mutual fund market
- Figure 17: Total U.S. mutual fundholdings, 1999-2004
- Figure 18: Graph: Growth in mutual fundassets: 1990-2004, current dollars
- Figure 19: U.S. Mutual fund assets,accounts, & average account
balances, 1999-2004
- Figure 20: Average mutual fund accountbalances, 1999-2004
Mutual fund market segmentation
Mutual funds in retirement accounts
- Figure 21: U.S. non-retirement andretirement mutual fund holdings,
1999-2004
- Figure 22: U.S. Non-retirement andretirement mutual fund holdings annual
% increases, 1999-2004
- Figure 23: U.S. Mutual fund assets by fundcategory, 1999-2004
- Figure 24: U.S. mutual fund assets by fundcategory as % of total assets,
1999-2004
The retirement segment
- Figure 25: Retirement mutual fundholdings, 1999 - 2004
- Figure 26: Retirement mutual fund holdingsby retirement plan, 1999 - 2004
- Figure 27: Retirement mutual fund holdingsby retirement plan as a % of
total retirement holdings, 1999 - 2004
- Figure 28: Retirement mutual fund assetsby fund category, 1999-2004
The non-retirement segment
- Figure 29: U.S. non-retirement mutual fundassets and CAGR, 1999 - 2004
- Figure 30: Non-retirement mutual fundassets by fund category, 1999 - 2004
- Figure 31: Non-retirement mutual fundassets by fund category, 1999-2004
- Figure 32: Non-retirement mutual fundassets by fund category annual %
increase, 1999-2004
Mutual fund companies and ETFs
- Figure 33: Mutual fund company issuedETFs, 2005
Competitive Landscape
Mutual fund providers
The largest mutual fund groups
- Figure 34: The 10 largest mutual fundgroups, by assets, 2001-05
Company profiles
The Vanguard Group, Inc
American Funds
Fidelity Investments
Franklin Templeton Investments
PIMCO Funds
T. Rowe Price Investment Service
Barclays Global Investors
Oppenheimer Funds Inc
Putnam Investments
Dodge & Cox
Mutual fund distribution channels
- Figure 35: Principal features of mutualfund distribution channels
Primary purchase channel
- Figure 36: Mutual fund ownership, bypurchase channel, 2001 and 2004
- Figure 37: Channels used to purchasemutual funds, 2001 and 2004
Major participants in distribution channels
Retirement assets
- Figure 38: Retirement assets by majordistributors, 2004
Non-retirement assets
- Figure 39: Non-retirement assets by majordistributors, 2004
Alternative investments
Major players in the ETF market
- Figure 40: Major issuers of ETFs,November, 2005
Largest SMA providers are still the wire houses
- Figure 41: Top separate account programmanagers, assets and market
share, 2004
Advertising and Promotion
Direct mail advertising by mutual funds
Mail volume, by mailer
- Figure 42: Mutual fund direct mailvolume*, top ten mailers, January
2004-September 2005
Mail volume, by mailer and by type
- Figure 43: Mutual fund direct mail volume,by mail type, January
2004-September 2005
- Figure 44: Mutual fund direct mail volume,top ten mailers, by mail type,
January 2004-September 2005
Direct mail campaigns
- Figure 45: Number of direct mail mutualfund campaigns, top ten mailers,
by mail type, January 2004-September2005
Other advertising
Performance-based advertising
Travel-based advertising
Other promotions and incentives
A boomer icon signs with Fidelity
The Consumer
Introduction
Types of accounts in which mutual funds are owned
- Figure 46: Mutual funds purchased by typesof account, December 2005
- Figure 47: Mutual funds purchased by typesof account, by age, December
2005
- Figure 48: Mutual funds purchased by typesof account, by income,
December 2005
Types of mutual funds in retirement accounts vs. non-retirementaccounts
Mutual fund retirement accounts
- Figure 49: Types of mutual funds inconsumer
retirement accounts, by age, December 2005
- Figure 50: Types of mutual funds inconsumer retirement accounts, by
household income, December 2005
Mutual fund non-retirement accounts
- Figure 51: Types of mutual funds
inconsumer non-retirement/retail accounts, by age, December 2005
- Figure 52: Types of mutual funds inconsumer non-retirement/retail
accounts, by household income, December2005
Attributes and features important to determining mutual fund choice
Overview
- Figure 53: Mutual fund features andattributes, ranked by
importance, December 2005
Past performance
- Figure 54: mutual fund past performance,ranked by importance, by age and
income, December 2005
Reputation
- Figure 55: Importance of mutual fundcompany reputation, by age
and income, December 2005
- Figure 56: Importance of mutual fundreputation, by age and income,
December 2005
Sales charges
Third party advice
Internet website recommendation
Other investments currently held by mutual fund owners
- Figure 57: Other investment activity ofmutual fund holders, by age,
December 2005
- Figure 58: Other Investments owned bymutual fund holders, by income,
December 2005
Other investments mutual fund owners would consider
- Figure 59: Future investmentconsiderations of mutual fund holders, by
age, December 2005
- Figure 60: Future investmentconsiderations of mutual fund holders, by
income, December 2005
The female mutual fund investor
Management of accounts
- Figure 61: Management of financialaccounts, by age, February 2005
Opinions on investing
- Figure 62: Opinions on investing, by age,February 2005
Types of accounts held by mutual fund owners--overview
- Figure 63: Mutual funds purchased by typesof account, by gender,
December 2005
Retirement accounts versus non-retirement accounts
- Figure 64: Types of mutual funds inconsumer retirement accounts, by
gender, December 2005
- Figure 65: Types of mutual funds inconsumer non-retirement/retail
accounts, by gender, December 2005
Important attributes when buying mutual funds
- Figure 66: Mutual fund features andattributes, ranked by importance, by
gender, December 2005
Other investments held by mutual fund holders
- Figure 67: Other investment owned bymutual fund holders, by gender,
December 2005
Other investments mutual fund holders would consider buying
- Figure 68: Future investmentconsiderations of mutual fund holders, by
gender, December 2005
Summary
Future Trends
Mutual fund products --whats coming?
Lifecycle fund expansion
"Hedge like" mutual funds
Pricing pressures
Intermediaries and institutional accounts
Pending legislation for 401(k) plans
529 savings plans
Advisor fees and compensation
Opportunities to encourage higher 401(k) contributions
Managed account advice for retirement plan participants
Retirement income solutions gap for baby boomers
Focus on developing retirement income management services
Some retirees not retiring permanently
Managed account advice for retirement plan participants
New retirement option: Roth 401(k)
Alternative products -- will they be more competitive?
A variety of ETFs for retirement plan investors
ETF "customization" for different investor types
ETF managed accounts within the retirement plan
Unified accounts
Hedge funds for the mass market
The workplace as marketplace
Appendix: Trade Associations
Investment Company Institute
Employee Benefits Research Institute
The Profit Sharing 401(k) Council for America
Society of Professional Administrators and Recordkeepers (SPARK)
Money Management Institute
National Association of Securities Dealers
Appendix: Mailing pieces and print ads
T. Rowe Price
Janus
Legg Mason
FidelityBank
OneAmerican Express
Fidelity
BancOne Securities
Janus
Fidelity
Wachovia
Smith Barney
Fidelit
Bank of America
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