Securities Sector in 2024: Navigating Volatile Global Markets

The securities sector saw modest growth in 2024, with net assets under management (NAUM) rising by 2%. However, persistent geopolitical tensions, shifting trade policies, and concerns over sovereign debt have created a more volatile market environment for mutual funds and their investors.

Geopolitical and Policy Uncertainty

Ongoing tariff disputes, trade-bloc negotiations, and political tensions have injected fresh volatility into global markets. While mutual fund assets grew slightly in 2024, these risks could limit further expansion and create more unpredictable market swings.

Rising Bond Yields and Interest Rate Risks

Recent tariff changes and mounting sovereign debt concerns have driven global bond yields higher, amplifying interest rate risk. This has led to sharper swings in fund valuations, affecting both equity and fixed-income portfolios.

Pension Exposure but Limited Wider Contagion

Occupational pension plans are particularly exposed, with 53.9% of their assets tied up in the three largest domestic mutual funds. This concentration leaves them vulnerable to equity and interest rate fluctuations.

However, linkages between the mutual fund sector and the banking or insurance sectors remain minimal, reducing the likelihood of broader financial instability.