Assets under management in the world’s investment industry rose by 12.3 per cent last year to reach $49 trillion, partly reversing the 18.6 per cent drop in assets during the turmoil of 2008, according to a report by Cerulli Associates, the US-based consultancy and research firm.

Global assets under management remain short of the peak of $53.6 trillion but are, on current trends, projected to exceed it by the end of 2011, said the Quantitative Update Global Markets 2010 report.

Mutual fund assets rose by 16.3 per cent last year, reaching 21.3 trillion, with market appreciation making up most of the rise, while net inflows contributed only 11 per cent of the $3 trillion increase.

“The 2009 rise in assets was welcome and surprisingly strong but the reality is that the outlook is quite fragile,” said Shiv Taneja, London-based managing director at the research firm. “Net flows were weak last year in the mutual fund sector, pointing to the poor quality of the recovery in assets, and while 2010 began with cautious optimism, Europe’s sovereign debt woes subsequently soured the mood.”

Regionally, Asia ex-Japan made the swiftest recovery from the financial crisis and is forecast to record a 14.5 per cent gain in assets under management between 2009 and 2014 to $3.8 trillion. The US and Europe together, however, will continue to dominate the asset management industry, accounting for 78 per cent of global assets.

The report comes shortly after the Merrill Lynch/Capgemini World Wealth Report, which confirmed that rising markets in 2009 coincided with a rise in the wealth of HNW individuals.