In this third installment of the mutual fund market share series, we look at how fund type impacts the audit market.
Here, we analyze the composition of the audit market across six fund types:
- open-ended funds;
- closed-ended funds;
- exchange-traded funds (ETFs);
- money market funds;
- variable annuity insurance funds; and
- business development companies.
Nearly three-quarters of funds are open-ended mutual funds. Open-ended mutual funds allow fund sponsors to sell and redeem an unlimited number of shares on demand. The value of an open-ended mutual fund is based on the fund’s net asset value (NAV).
Over 40% of open-ended mutual funds are audited by PricewaterhouseCoopers (PwC). The three remaining Big Four firms each audit between 12% and 17% of the market. Regional firms Cohen & Co, Tait Weller & Baker, and BBD hold 6%, 4%, and 3% of the market, respectively.
Just 5% of funds are closed-ended mutual funds. Closed-ended mutual funds have a fixed number of shares that are sold through an IPO. The value of a closed-ended mutual fund is based on the trading price of the fund’s shares.
PwC holds a narrow edge in closed-ended mutual fund clients with 25% of the market. Deloitte is second with 24%. The other Big Four firms, KPMG and Ernst & Young (EY), audit 20% and 17%, respectively, while Cohen & Co audits 5% and Tait Weller & Baker audits 3%.
Exchange Traded Funds
Roughly 16% of funds are exchange-traded funds (ETFs). ETFs are funds that track a basket of securities. ETFs allow investors to diversify through tradable securities.
PwC audits half of the ETF market. EY follows with 20%, Deloitte with 12%, and Cohen & Co with 9%.
Money market funds, variable annuity insurance, and business development companies (BDC) make up the remaining 3%, 2%, and 1% of funds.
PwC leads the money market and variable annuity insurance markets with 43% of each. Together, the Big Four audit 98% of money market funds and 99% of variable annuity insurance funds.
EY leads the BDC market with 20%, followed closely by Deloitte with 19% and international firm RSM with 15%.
For more information about Audit Analytics or this analysis, please contact us.
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