In its annual survey of the investment industry, the IMA says inadequate risk controls in investment banks, the failure of credit rating agencies and insufficient scrutiny along the value chain all contributed to the crisis.
It says lessons can be learned on risk analysis, management and product design.
The IMA, which has 140 member firms, also hits out at ineffective regulation of the financial services market throughout the credit crisis.
It says there is a need for better, more focused regulation, not more regulation.
One respondent to the survey said: “When the gods of greed meet the lords of leverage, you get a big problem. Greed is not new, reckless lending is not new, imprudent borrowing is not new but reckless lending and imprudent borrowing in combination with astounding levels of unregulated leverage is new.”
The survey found that although the number of funds in the market has risen by a quarter in the last 10 years, only 55 per cent saw positive net sales last year, a 20 per cent drop from 2000.
Net retail sales for 2007 plunged by over a third to £9.5bn from £15.3bn in the previous year. The industry was particularly hit in the fourth quarter of last year as the credit crunch took hold.
Chief executive Richard Saunders says: “Economic conditions in the latter half of 2007 led to greater caution among investors and net retail sales slowed significantly.
“Equity funds were the worst hit as investors shifted their assets, moving towards less risky and more conservative products. This caution is likely to persist in the immediate future, given market conditions.”