It what the mutual fund industry's past in the United States is prologue to its future in Europe, the place to be is the retirement industry. At least that would be one takeaway from comments made by fund industry insiders at Barron's Mutual Fund Summit held this week in Boston. The speakers, who included Fidelity COO Robert Reynolds and Steven Spiegel, Putnam's chief of global distribution and corporate development, were also optimistic about the industry's future both in the US and overseas (as industry leaders would be expected to be).

Fidelity's Reynolds told attendees that the collapse of Enron had driven a blow deep into the US equity markets, but that the fund industry has managed to so far avoid that taint. "We came pretty close to a systemic failure of the U.S. market system," said Reynolds. Whether whistling past the grave yard or not, he added that the current crisis of corporate governance is temporary and that the prospects for the fund industry are "very, very bright."

Reynolds, who built his reputation running Fidelity's 401(k) business noted that the retirement industry, especially the market for defined contribution plans, is still in the early stages in Europe. He expects that the market for these products will continue to grow in Europe as government sponsored pension plans are found wanting. In his view the European market is where the American market was sometime in the late 1980's or early 1990's.

He explained that Fidelity is shifting its focus to older investors who control the bulk of assets in the fund industry. "By 2010 we estimate that two-thirds of all investable assets in this country will be controlled by people over 55 years of age," he explained. "While those below age 55 will have $700 billion less than their immediate elders control right now, so there is a tremendous wealth shift going on in this country right now," said Reynolds.

Spiegel was a little less hopeful on the short-term outlook for the fund industry in Europe, although he still called that market "attractive." Like Reynolds, he believes that growth in the European fund industry will be driven by retirement plans.

Another speaker, Thomas Mann, managing principal at Constellation, USA, pointed out that though demand for retirement plans will likely drive that market, it will prove harder to make money than in the United States. European funds are much smaller than american funds (roughly one-eight the assets per fund) and the marketplace itself is a hodgepodge of nations.  

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