A Letter From ICI’s
Chief
Economist
ICI Research: Staff
and
Publications
SECTION ONE:
Overview of U.S.-Registered
Investment Companies
SECTION TWO:
Recent Mutual Fund
Trends
SECTION THREE:
Exchange-Traded Funds
SECTION FOUR:
Closed-End Funds
SECTION FIVE:
Mutual Fund Fees and
Expenses
SECTION SIX:
Mutual Fund Owners:
Who Are They and
Where Do They
Purchase Fund Shares?
SECTION SEVEN:
The Role of Mutual Funds
in Retirement and
Education Savings
APPENDIX A:
How Mutual Funds and
Investment Companies
Operate
The
2006 Investment Company Fact Book is the 46th annual review of ICI research
and statistical collections. Mutual funds, closed-end funds, exchange-traded
funds, and unit investment trusts—collectively known as registered
investment companies—
have become an integral part of the U.S. and
world financial markets over the years, managing almost $10 trillion
and providing investment services to nearly half
of all U.S. households.
As the industry has grown, so has the Institute’s body of research on funds and their shareholders. In 2005 alone, ICI collected data from hundreds of fund organizations to measure the role that funds play in the financial and retirement markets. Furthermore, our surveys of U.S. households helped gauge the importance of fund investing to the American public, promoted understanding of how investors use funds to access financial markets, and tracked sentiment about the fund investing experience. In 2005, ICI published reports on a broad range of topics, including trends in the IRA and 401(k) markets, fund investors’ use of financial advisers, and trends in mutual fund fees and expenses.
Looking broadly at ICI’s research, several themes emerge:
- Investment companies operate in a highly competitive marketplace. More than 500 fund sponsors compete with each other and with providers of other investment products to best meet investors’ financial goals.
- Investors make choices every day that fuel competition. More than 40 percent of fund organizations had net outflows in 2005, and new investment was concentrated in funds with below-average expenses, below-average portfolio turnover, and above-average 10-year performance records.
- Competition spurs innovation in the marketplace. In recent years, fund sponsors introduced new types of closed-end and exchange-traded funds to serve a greater range of investor needs, expanded the number of lifecycle and lifestyle funds to assist investors in saving for retirement, and added to an already expansive list of services to make fund investing even more convenient.
- Investment companies help a broad range of investors meet their financial goals. Although fund ownership is greatest among 35- to 64-year olds and middle-income households, funds serve more than 90 million individual investors of all ages, incomes, and educational backgrounds.
- Most individuals receive some help or guidance before investing in funds. Nearly 90 percent of fund shareholders invest through an employer-sponsored retirement plan or through a financial adviser. These intermediaries play an important role in helping investors select funds to meet their investment goals.
The investing public is well served by the dynamic and competitive nature of the fund marketplace, and reliable information and analysis are important to making the market work effectively. We are dedicated to providing high-quality data and research to assist public policymakers in creating and adapting effective laws and regulations, the media in informing and educating investors, and fund organizations in serving their shareholders well. This annual research report is intended to be a service to the investing public and all who work for them.
Brian Reid
Investment Company Institute
May 2006
As Chief Economist, Brian Reid leads the Institute’s Research Department and is a member of the Institute’s senior management team.
Total Investment Company Assets
(billions of dollars in assets at year-end)
Download an Excel file of this data.
Sources: Investment Company Institute and Strategic Insight Simfund
