The Road Ahead: US Markets and the Investment Management Industry

The Road Ahead: US Markets and the Investment Management Industry

Boston Financial Client Forum

Brian Reid

September 15, 2009

Total Fund Assets Up 9 Percent from Year-End 2008

* Data for 2009 is as July 31, 2009. Source: Investment Company Institute

Mutual Funds

Closed-End Funds

ETFs

(Billions of Dollars)

7,174 7,199

11,117

9,4838,589

7,779

6,651

10,321

12,921

11,280

*

2

Net New Cash Flows into U.S. Stock and Bond Mutual Funds

3

Dollars in Billions

* Data for August 2009 are estimated through August 19, 2009.Source: Investment Company Institute

2008 2009

*

Flows to Equity Funds Related to Global Stock Price Performance 1994-2009*

4

Billions of Dollars Percentage Points

* Data are through July 2009.1 The return on equities is measured as the year-over-year change in the MSCI All Country World Index.2 Net new cash flow to equity funds is plotted as a six-month moving average.Sources: Investment Company Institute and Morgan Stanley Capital International.

Net new cash flow2

Total Return on Equities1

Flows to Bond Funds Related to Bond Returns

5

1 The total return on bonds is measured as the year-over-year change in the Citigroup Broad Investment Grade Bond Index.2 Net new cash flow to bond funds is plotted as a three-month moving average of net new cash flow as a percentage of previous month-end assets. The data exclude flows to high-yield bond funds.Sources: Investment Company Institute and Citigroup.

((19941994––July 2009)July 2009)

Flows to Taxable Retail Money Market Funds Related to Interest Rate Spread

(1989(1989–July –July 2009)2009)

Interest Rate Spread2

Percentage points

* Data are through July 2009.1 Net new cash flow is a percent of previous month-end taxable retail money market fund assets and is shown as a six-month moving average.2 The interest rate spread is the difference between the taxable retail money market fund yield and the average interest rate on money market deposit accounts. Sources: Investment Company Institute, iMoneyNet, and Bank Rate Monitor.

Net New Cash Flow1

Percent of total net assets

6

Net Issuance of ETF Shares

*

* Data are through July 2009.Sources: Investment Company Institute and Strategic Insight.

Billions of Dollars

7

Household Net Worth and Personal Savings as a Multiple of Disposable Personal Income

8

Source: Federal Reserve Board

0.22

0.18

0.14

0.10

0.06

0.02

0.26Net Worth

Savings

(1960-2009)

1960 1967 1974 1981 1988 1995 2002 2009

Fund Complexes with Net Inflows to Stock and Bond Funds*

9

* Data are through July 2009.Source: Investment Company Institute

(Percent of Complexes)

Number of Fund Sponsors

Fund Sponsors Leaving

Total Number of Sponsors at Year-End

Fund Sponsors Entering

Source: Investment Company Institute

10

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* Excludes load fees and 12b-1 fees. Also excludes funds of funds and variable annuities.Sources: Investment Company Institute; Lipper; ValueLine Publishing, Inc.; CDA/Wiesenberger Investment Companies Service; © CRSP University of Chicago, used with permission, all rights reserved (312.263.6400/www.crsp.com); and Strategic Insight Simfund.

Estimated Stock Mutual Fund Fees Collected and Stock Fund Net Assets*

Estimated Fees CollectedTotal Net Assets

Billions of Dollars Billions of Dollars

Major Regulatory, Legislation, and Legal Issues

• SEC Proposals for Money Market Funds

• Retirement Policy Retirement Plan Coverage 401(k) Tax Incentives “Reform” Efforts

• Jones v. Harris and Fund Fees

• Financial Regulatory Reform

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