The World’s Biggest Mutual Fund and ETF Providers
The global net assets of mutual fund and ETF providers totaled $38 trillion in 2022. Despite its massive size, the industry is dominated by a relatively small number of brands.
This graphic uses data from Morningstar to show the largest fund brands and their growth rates in 2022.
The Biggest Get Bigger
Below, we rank mutual fund and ETF brands by net assets and show their organic growth rate.
The organic growth rate measures the change in net flows, which reflects growth related to marketing efforts and not the market performance of the provider’s funds.
|Rank||Fund Provider||Net Assets in 2022||Organic Growth Rate (2021-2022)|
|9||T. Rowe Price||$637B||-7.2%|
Vanguard and iShares continue to dominate the list and account for 25% of mutual fund and ETF net assets globally. Both saw net inflows, though iShares’ growth rate was much higher. It collected $222B, more than double the $101 billion that Vanguard received.
State Street, the fifth-largest fund brand, was the only other name on the list to see net inflow. The company manages the SPDR S&P 500 ETF, which is the largest ETF in the world. It was a top pick for retail investors in early 2023.
The smallest of the giants—T. Rowe Price and Franklin Templeton—saw net outflows for the second year in a row. Both firms focus on active management, a strategy designed to outperform the general market through the decisions of investment managers.
Shifting Preferences: From Mutual Fund to ETF
The decline of brands focused on active management reflects a larger trend within the industry. In 2022, investors heavily favored passive funds and ETFs over mutual funds and active funds.
This could be due to the higher fees and long-term underperformance of many active funds.
|Fund Type||Inflows (+) or Outflows (-) in 2022|
|Indexed (Passive) Funds||+$348B|
Passive funds now comprise 38% of global assets, up from 19% in 2013.
Typically, passive funds have very low expense ratios that limit the fees providers can earn. Existing brands also have large economies of scale that would be difficult for new entrants to replicate. For these reasons, fewer firms compete in passive management and this is ultimately leading to more consolidation in the industry.
Fortunately, investors have benefited from the cost-effective and efficient path to investment ownership that passive funds provide. In 2022, the average expense ratio of an actively-managed equity mutual fund was 0.66%, while the average for an index equity mutual fund was 0.05%.
On the flip side, some experts have expressed concerns that industry consolidation reduces financial stability. The Federal Reserve states that if a large firm experienced a significant event, such as a cybersecurity breach, it could “lead to sudden massive redemptions from that firm’s funds and thus potentially from the asset management industry as a whole.”
Visualizing the Rise of the U.S. Dollar Since the 19th Century
This animated graphic shows the U.S. dollar, the world’s primary reserve currency, as a share of foreign reserves since 1900.
Visualizing the Rise of the U.S. Dollar Since the 19th Century
As the world’s reserve currency, the U.S. dollar made up 58.4% of foreign reserves held by central banks in 2022, falling near 25-year lows.
Today, emerging countries are slowly decoupling from the greenback, with foreign reserves shifting to currencies like the Chinese yuan.
At the same time, the steep appreciation of the U.S. dollar is leading countries to sell their U.S. foreign reserves to help prop up their currencies, in turn buying currencies such as the Australian and Canadian dollars to help generate higher yields.
The above animated graphic from James Eagle shows the rapid ascent of the U.S. dollar over the last century, and its gradual decline in recent years.
Dollar Dominance: A Brief History
In 1944, the U.S. dollar became the world’s reserve currency under the Bretton Woods Agreement. Over the first half of the century, the U.S. ran budget surpluses while increasing trade and economic ties with war-torn countries, expanding its influence as the world’s store of value.
Later through the 1960s, the U.S. dollar share of global foreign reserves rapidly increased as political allies stockpiled the dollar.
By 2000, dollar dominance hit a peak of 71% of global reserves. With the creation of the European Union a year earlier, countries such as China began increasing the share of euros in reserves. Between 2000 and 2005, the share of the dollar in China’s foreign exchange reserves fell by an estimated 15 percentage points.
The dollar began a long rally after the global financial crisis, which drove central banks to cut their dollar reserves to help bolster their currencies.
Fast-forward to today, and dollar reserves have fallen roughly 13 percentage points from their historical peak.
The State of the World’s Reserve Currency
In 2022, 16% of Russia’s export transactions were in yuan, up from almost nothing before the war. Brazil and Argentina have also begun adopting the Chinese currency for trade or reserve purposes. Still, the U.S. dollar makes up 80% of Brazil’s reserves.
Yet while the U.S. dollar has decreased in share of foreign reserves, it still has an immense influence in the world economy.
The majority of trade is invoiced in the U.S. dollar globally, a trend that has stayed fairly consistent over many decades. Between 1999-2019, 74% of trade in Asia was invoiced in dollars and in the Americas, it made up 96% of all invoicing.
Furthermore, almost 90% of foreign exchange transactions involve the U.S. dollar thanks to its liquidity.
However, countries are increasingly finding alternative options than the dollar. Today, Western businesses have begun settling trade with China in renminbi. Looking further ahead, digital currencies could provide options that don’t include the U.S. dollar.
Even more so, if the U.S. share of global GDP continues to shrink, the shift to a multipolar system could progress over this century.
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