By: Sun Zhao Yang
Compiler: http://www.fundcn.org

Dream of the New World — Fund in the United States (8)

5, the modern fund industry in the takeoff stage : 1980s of the 20th century and the 1990s the explosive growth

Since the 1980s, the United States gradually reduce domestic interest rates and moving toward stability, economic growth and prosperity in the stock market also make investments to fund their rapid development. Especially in the mid and late 1980s, the stock market than the long-term average revenue bonds and bank deposits interest rates gradually yield advantage. investment funds appeared in the development of a great leap forward. Entering the 1990s, integration of the world economy makes the rapid development of the concept of globalization investment in the United States led to the development of investment funds, Meanwhile the Clinton Administration domestic economy’s rapid growth makes the stock market surged to an unprecedented level, the stock has been able to fund rapid expansion. Currently, the United States of the Common Fund had total assets of up to seven trillion U.S. dollars, some 40 million holders, 50% of families to invest in the Fund, the Fund’s assets total household assets of 40%.

20 century 1970s, the influx of investors started the mutual fund market. 1974-82, the money market mutual fund assets held miraculously increase by double digits. From less than 20 billion dollars to over 200 billion dollars. 1982, the Common Fund had assets of 3 / 4 of the money market funds. This year, Congress enacted a law to abolish the factory bank restrictions allow banks to provide investors with a payment of interest, and mutual funds similar to a savings account. Despite the slowdown in the large flow of funds from the bank mutual funds, but almost none of the Common Fund has investment funds back to the bank. Investors have knowledge of mutual funds and the like on it.

Dream of the New World — Fund in the United States (9)

Short-term money market for the prosperity of the Common Fund to investors in the world have an important role to play. 20 actual 1970s continued the bear market caused by the mutual fund industry assets shrink. Account holders from the number in 1971 dropped nearly 11 million in 1978 to 8.5 million. From 1979 onwards, money market funds to promote the rapid growth of the account holders, the 1983 total of more than 21 million. Later, when money market mutual funds slowing growth, the 1980s bull market with long-term funds attractive again, there is a widespread resumption of growth. Since 1980, the total assets of each fund assets, Fund volume and the number of account holders, etc. showing double-digit compound annual growth rate. New funding comes mainly from investors to re-adjust its investment portfolio. invest in some of the other tools of investment funds into mutual funds.

1981 “Tax Reform Act” to allow every American to use their earnings to establish a personal retirement accounts, and in many cases, allow pre-tax income as an annual contribution of funds so if the account. Personal retirement accounts a large number of funds to enter the mutual fund. This strong cash flow has been going on for several years until 1986. In late 1999, the retirement savings of mutual fund assets accounted for 38% personal retirement accounts and employer-sponsored plans pay set-50:50.

Dream of the New World — Fund in the United States (10)

In the 1980s and 1990s, the emergence of new sales channels, as the traditional distribution channels important supplement. Include : mutual funds, wet packed package marketing plan, financial advisers, bank sales channels and the latest online marketing. 20th century prior to the late 1970s, mutual fund investors to buy shares of mutual funds is professional management and to seek investment income and capital value and no more. In the 20th century, the 1980s and the 1990s, Driven by a common competitive fund management companies to bring their customers to provide simple services to multi-faceted products, to the extent possible, meet the needs of different types of investment in the demand of investors. Mutual fund categories in 1970 from the five categories in 2000 to 33 category. Fund management companies also have extensive use of advertising and brand marketing tool. Mutual fund product development, the consolidation of the Common Fund for the United States in the field of financial services, in 1980. 20 Americans held only a mutual fund. And in 2000, less than three Americans have held a mutual fund.

Dream of the New World — Fund in the United States (11)

6, the Common Fund for the current development situation

Currently, the United States closed the Common Fund for only about 500, mostly bond funds and state funds, and the open-end fund as high as 5,000 the number of 000 species diversity.

The United States has always been the world’s largest mutual fund market, according to investment company firms Association (ICI) statistics, As of the end of 2005, global mutual funds with total assets had reached 17.8 trillion U.S. dollars. The United States 8.9 trillion to the assets of the global mutual funds market share of 50%.

The United States share of the Common Fund have dominated the world’s dominant position until 2001, Common Fund of the United States market share of close to 60% 2001 and the 911 incident led directly to the American stock market fell, so that the mutual funds market share has been shrinking. Despite three years of continuous decline, the United States mutual fund market share to 50% is the highest percentage of the first, The current downward trend has been largely reversed.

In the mutual fund the emerging era, the Fund’s sponsors very limited in number, and they are generally in Public-fund as a major business, and to the present, mutual fund industry pattern has been completely different from the past : financial advisory firms, banks, insurance companies, Securities brokers and other financial services companies are beginning to get involved in the mutual fund area, Common Fund is only to satisfy their needs and provide investors of the many financial products in one.

Dream of the New World — Fund in the United States (12)

From the end of 2005, nearly 60% of the Common Fund by the financial consulting firm management, They belonging to the mutual fund assets reached 50% of the total, while the remaining half from banks, insurance companies, stockbroking companies, and overseas controlled by the promoters. American mutual fund industry low entry threshold created a continuous stream of new sponsors to enter the industry, These fresh blood to the whole industry has been relatively intense competition, not because the industry has become as Mangshan reduce competition, in 1985 when the top 25 mutual funds, Only just 16 in 2005 is still in the top 25 position, American fund industry competitive intensity is obvious. This continued intense competition makes the quality of individual fund companies is very difficult to achieve the monopoly. Under the Herfindahl-Hirschman Index Measure : American fund industry in 2005, with only 400 index, is extremely fragmented industry, close to free competition. changes in market share also shows that the competition fierce. Although the top five funds in the market share of these 20 years, almost no change, But the top 10 and 25 of the fund market share have a certain degree of decline.

Dream of the New World — Fund in the United States (13)

Investors continued to chase the high yields, make the fund industry’s assets are focused on those who are able to maintain long-term performance of the surplus fund companies, historical data has proved this point to 2005 as an example. 46% of the assets concentrated in the 10 yield the top 25% of the fund group, 37% of the assets concentrated in the ranking of 25% -50% of the fund group, in other words, long ranked forward 50% of the Fund 3 / 4 above assets. The market trend is for the Fund to pursue long-term performance of the competitive environment is gradually taking shape.

In the United States the fund industry, individual investors Mutual fund assets accounted for the lion’s share, institutions for the mutual fund assets of a smaller proportion. At the end of 2005, individual holders of the Common Fund assets 7.7968 trillion U.S. dollars. Common Fund for the total assets of 87.6%, institutional holders of 1.1083 trillion U.S. dollars in mutual fund assets, Common Fund for the total assets of 12.4%. Individuals and institutions since 2000, the ratio has been maintained. On the specific terms of the various funds, stock-type, mixed and bond funds and individuals, the proportion has been stable, But personal accounts for the money market fund assets significant proportion of the decline by 2000, 76.5% in 2005 fell to the 69.33%, and the companies account for the proportion of mutual fund assets then rose.

Recalling the fund industry in the United States history, We can see that the United States always adapt to the fund industry and capital market development fund changes and continue to progress :

● Fund from a closed form to open;
● Fund products and investment by a single goal towards diversification;
● Investment fund market by a single principal to the residents, such as pensions and institutional investors both;
● Fund from direct sales to rely on intermediaries agent; Fund operation so costs have been declining; And so on.

It is this constant change in the spirit of innovation, the United States can fund the lion’s share of the global scale, and promote the overall development of the capital market so that the United States capital markets become global leaders.

Copyright Fund China 2009.

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