The place of mutual funds in the investor’s product universe has started changing and will continue to do so, says Earl Bederman, president of Toronto-based Investor Economics while explaining the company’s survey entitled Emerging Trends and Prospects for the Canadian Wealth Market And Funds Industry.

Findings of the survey, unveiled at the recent 20th Annual Investment Funds Institute of Canada conference in late September include:

  • Canadians currently control $2.1 trillion in wealth, up 11% during 2005 up from $1.55 trillion in 2000.
  • The long-term forecast suggests a compound annual rate of 8%, with wealth growing to $2.8 trillion in 2009 and to $4.3 trillion in 2014.
  • In 2005, equities in all forms – mutual funds included – accounted for 46% of the total wealth market by asset mix, increasing to 50% in 2009 and 56% in 2014; however growth in dollar value of mutual fund holdings will not increase at the same rate as actual holdings.
  • In 2005, investment funds including mutual funds and segregated funds accounted for 32% of the wealth market and deposits held the same percentage, while the forecast for 2014 is for 29% in funds and 22% in deposits.
  • In 2005, 60% of all Canadian wealth was controlled by households worth more than one million dollars, a proportion that will rise to 63.4% by 2009 and 66.5% by 2014.
  • In 2005, 58.6% of wealth was controlled by households over age 55 years, a figure that will rise to 62.9% in 2009.
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    These and other statistics in Mr. Bederman’s study point to a more complex mutual fund product universe with competition intensifying for investor dollars.

    “Mutual fund companies increasingly are changing the array of products that they offer, moving increasingly from products to solutions,” including higher net worth solutions and discretionary accounts, he explains. This in turn increases the demands on the advisors’ skills.

    Mutual funds remain the cornerstone and building block of financial wealth, Mr. Bederman stressed during a follow-up interview with The Insurance Journal.

    “In the early days of the transformation and growth of the wealth market in the 1990’s, for example, funds were absolutely the predominant vehicle,” he says. “Now, there are changes that are occurring and you cannot expect that the traditional one-size fits-all fund can be all things to all people.”