Market volatility is likely to extend into 2013, continuing to create pressures on mutual fund shops, particularly in the cost-cutting arena, according to a study released by accounting firm Deloitte.

In the 2013 Mutual Fund Outlook, next year will present concerns related to regulatory developments and operations, but will also offer opportunities for growth.

For example, the study argues that fund firms may decide now is the time to capitalize on growing investor demand for exchange traded funds (ETFs). ETF assets are expected to reach $2 trillion by 2015,2 and fund firms will decide going forward whether they should enter or expand into the ETF marketplace. Firms may also look to strengthen their distribution channels by taking advantage of investors’ increasing use of registered investment advisers (RIAs).

The report also suggests that "money market funds will almost certainly remain a focal point for regulators in 2013."

"The FSOC believes investor-led runs on money market funds could be a systemic risk to the financial system. It has issued a formal proposal urging the SEC to establish new standards for these funds, likely cementing action on money market funds in 2013," the report states.

Moreover, with assets under management growth likely to continue, "we believe fund companies will shift part of their focus back to the operations side of the business in 2013. Leading up to 2008, many firms generated multiple new fund offerings and paid less attention to operational improvements as they rushed to attract assets. With the onset of the financial downturn, cost cutting took center stage, and operations and technology investments took a backseat."

The full report can be accessed here. 

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