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A Letter From ICI’s Chief
Economist

2005 Facts at a Glance

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

DATA TABLES

APPENDIX A:
How Mutual Funds and
Investment Companies
Operate

APPENDIX B:
ICI Statistical Releases
and Research

GLOSSARY OF TERMS

FACT BOOK ARCHIVE

Closed-end funds are one of four types of investment companies, along with mutual (or open-end) funds, exchange-traded funds, and unit investment trusts. Closed-end funds generally issue a fixed amount of shares that are listed on a stock exchange or traded in the over-the-counter market. The assets of a closed-end fund are professionally managed in accordance with the fund’s investment objectives and policies, and may be invested in stocks, bonds, and other securities.

Assets in Closed-End Funds

Assets in closed-end funds grew in 2005, marking the fourth consecutive year of increasing assets. At year-end 2005, assets in closed-end funds reached $276 billion. Since year-end 2000, closed-end fund assets have grown 93 percent. In 2005, closed-end fund assets increased 9 percent.

Bond funds have accounted for a large majority of assets in closed-end funds for the past decade. At the end of 2005, bond funds held $172 billion, or 62 percent of closed-end fund assets. Equity funds totaled $105 billion, or 38 percent of closed-end fund assets.

Equity funds, however, have fueled about half of the recent growth in closed-end fund assets. From year-end 2000 through 2005, assets in closed-end equity funds increased by $68 billion, or 186 percent, while assets in closed-end bond funds rose by $65 billion, or 61 percent.

Closed-End Fund Assets Increase for Fourth Consecutive Year

(billions of dollars, 1995–2005)

Download an Excel file of this data.

Source: Fundamentals, “The Closed-End Fund Market in 2005”

The role of equity funds in the recent growth of closed-end fund assets is also evident when proceeds from initial and additional public offerings of equity and bond funds are compared. In 2004 and 2005, proceeds from initial and additional public offerings of equity funds greatly exceeded those of bond funds; the reverse was true in 2002 and 2003.

For more complete data on closed-end funds, see Section 2 in the Data Tables the Statistics and Research section of this site.

Closed-End Equity Fund Share Issuance Increases in 2004 and 2005

(proceeds from the issuance of initial and additional public offerings of closed-end fund shares, millions of dollars, 2002–2005*)

Download an Excel file of this data.

*Data is not available for years prior to 2002.
Note: Components may not add to the total because of rounding.
Source: Fundamentals, “The Closed-End Fund Market in 2005”

Number of Closed-End Funds

The number of closed-end funds available to investors has also increased during the past several years. At the end of 2005, there were 634 closed-end funds, up from 482 at the end of 2000. As with closed-end fund assets, equity funds accounted for about half of the increase in the number of closed-end funds during this five-year period. While the majority of closed-end equity funds invest in a broad mix of U.S. companies, many of the closed-end equity funds introduced since 2002 have been real estate and energy sector funds.

Number of Closed-End Funds

(selected years)

Download an Excel file of this data.

Source: Fundamentals, “The Closed-End Fund Market in 2005”

Characteristics of Closed-End Fund Investors

An estimated 2 million U.S. households held closed-end funds in 2005. These households tend to include affluent, experienced investors who own a range of equity and fixed-income investments. In 2005, 95 percent of closed-end fund investors also owned individual stock either directly or through mutual funds.

Seventy percent owned individual bonds, bond mutual funds, or fixed annuities. In addition, nearly half of these investors owned investment real estate. Because a large number of closed-end fund investors also own individual stock and mutual funds, closed-end fund investors are similar in many respects to the individuals who own these investments. For instance, closed-end fund investors, like individual stock and mutual fund investors, tend to be college-educated and have household incomes above the national average.

Closed-End Fund Investors Own a Broad Range of Investments

(percent of closed-end fund investors owning each type of investment, 2005)*

Download an Excel file of this data.

*Multiple responses are included.
Source: Fundamentals, “The Closed-End Fund Market in 2005”

Nonetheless, closed-end fund investors exhibit certain characteristics that distinguish them from individual stock and mutual fund investors. For example, closed-end fund investors tend to have much greater household financial assets than either individual stock or mutual fund investors. Closed-end fund investors are also more likely to be self-employed or retired from their lifetime occupations than either individual stock or mutual fund investors.

Ownership of bond investments traditionally has been greatest among older individuals and households in the highest income and wealth groups. Because bond funds account for a large portion of closed-end fund assets, investors in these funds tend to have demographic characteristics similar to those of bond investors in general.

Closed-End Fund Investors Have Above-Average Household Incomes,
Financial Assets

Download an Excel file of this data.

¹Investment Company Institute Annual Mutual Fund Tracking Survey, 2005
²Investment Company Institute, Profile of Mutual Fund Shareholders, Fall 2004
³Investment Company Institute and Securities Industry Association, Equity Ownership in America, 2005
⁴Household financial assets exclude primary residence, but include assets in employer-sponsored retirement plans.
⁵among those who are employed
Note: Number of respondents varies.
Source: Fundamentals, “The Closed-End Fund Market in 2005