Back to Top

This chapter takes an in-depth look at the characteristics of U.S. mutual fund owners and examines how they buy fund shares.

The percentage of U.S. households owning mutual funds grew eightfold in the 1980s and 1990s, and has held steady for the past 15 years, averaging about 45 percent since 2000. In mid-2014, 43 percent of all U.S. households owned mutual funds. The estimated 90 million people who owned mutual funds in mid-2014 belong to all age and income groups, have a variety of financial goals, and buy and sell mutual funds through four principal sources: investment professionals, employer-sponsored retirement plans, fund companies directly, and fund supermarkets.

Individual and Household Ownership of Mutual Funds

In mid-2014, an estimated 90 million individual investors owned mutual funds—and at year-end, these investors held 89 percent of total mutual fund assets, directly or through retirement plans. Household ownership of mutual funds has remained steady since 2000. Altogether, 43 percent of U.S. households—or about 53.2 million—owned mutual funds in mid-2014, slightly below the 2000–2014 average of about 45 percent (Figure 6.1). Mutual funds were a major component of many U.S. households’ financial holdings in mid-2014. Among households owning mutual funds, the median amount invested in mutual funds was $103,000 (Figure 6.2). Nearly three-quarters of individuals heading households that owned mutual funds were married or living with a partner, nearly half were college graduates, and more than three-quarters worked full- or part-time.

Figure 6.1

43 Percent of U.S. Households Owned Mutual Funds in 2014

Millions of U.S. households owning mutual funds, selected years

Figure 6.1

Download an Excel file of this data.

Sources: Investment Company Institute and U.S. Census Bureau. See ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014.”

Figure 6.2

Characteristics of Mutual Fund Investors

Mid-2014

How many people own mutual funds?
90.4 million individuals
53.2 million U.S. households
Who are they?
51 is the median age of the head of household
73 percent are married or living with a partner
49 percent are college graduates
77 percent are employed (full- or part-time)
12 percent are Silent or GI Generation (born 1904 to 1945)
42 percent are Baby Boomers (born 1946 to 1964)
31 percent are Generation X (born 1965 to 1980)
15 percent are Millennial Generation (born 1981 to 2004)
$85,000 is the median household income
What do they own?
$200,000 is the median household financial assets
$103,000 is the median mutual fund assets
68 percent hold more than half of their financial assets in mutual funds
62 percent own IRAs
85 percent own DC retirement plan accounts
4 mutual funds is the median number owned
86 percent own equity funds
When and how did they make their first mutual fund purchase?
47 percent bought their first mutual fund before 1995
64 percent purchased their first mutual fund through an employer-sponsored retirement plan
Why do they invest?
91 percent are saving for retirement
49 percent are saving for emergencies
49 percent hold mutual funds to reduce taxable income
23 percent are saving for education

Download an Excel file of this data.

Sources: Investment Company Institute and U.S. Census Bureau. See ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014”; ICI Research Perspective, “Characteristics of Mutual Fund Investors, 2014”; and ICI Research Report, “Profile of Mutual Fund Shareholders, 2014.”

Mutual Fund Ownership by Age and Income

Mutual fund ownership in mid-2014 was greatest among households in their peak earning and saving years—between the ages of 35 and 64—at about 50 percent (Figure 6.3). Thirty-four percent of households younger than 35 owned mutual funds, the same as for households aged 65 or older.

Among mutual fund–owning households in mid-2014, 42 percent were headed by members of the Baby Boom Generation (head of household born between 1946 and 1964), 31 percent were headed by members of Generation X (born between 1965 and 1980), 15 percent were headed by members of the Millennial Generation (born between 1981 and 2004), and 12 percent were headed by members of the Silent and GI Generations (born between 1904 and 1945) (Figure 6.4). Heads of mutual fund–owning households had a median age of 51 years (Figure 6.2).

Figure 6.3

Incidence of Mutual Fund Ownership Is Greatest Among 35- to 64-Year-Olds

Percentage of U.S. households within each age group, mid-2014

Figure 6.3

Download an Excel file of this data.

Note: Age is based on the age of the sole or co-decisionmaker for household saving and investing.
Sources: Investment Company Institute and U.S. Census Bureau. See ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014.”

Not only were Baby Boomers the largest shareholder group in mid-2014, they also held the largest percentage of households’ mutual fund assets, at 51 percent (Figure 6.4). Households headed by members of Generation X (31 percent), the Silent and GI Generations (13 percent), and the Millennial Generation (5 percent) held the rest.

Figure 6.4

The Baby Boom Generation Is the Largest Shareholder Group and Holds the Most Mutual Fund Assets

Percentage of mutual fund–owning households and mutual fund assets by generation, mid-2014

Figure 6.4

Download an Excel file of this data.

Note: Generation is based on the age of the sole or co-decisionmaker for household saving and investing.
Source: ICI Research Perspective, “Characteristics of Mutual Fund Investors, 2014”

Households with higher annual incomes are more likely to own mutual funds than those with lower annual incomes. In mid-2014, 67 percent of U.S. households with annual income of $50,000 or more owned mutual funds, compared with 18 percent of households with annual income of less than $50,000 (Figure 6.5). In fact, lower-income households tend to have less savings than higher-income households. The typical household with less than $50,000 in annual income had only $12,000 in savings and investments, while the typical household with annual income of $50,000 or more held $190,000 in savings and investments.

Figure 6.5

Ownership of Mutual Funds Increases with Household Income

Percentage of U.S. households within each income group, mid-2014

Figure 6.5

Download an Excel file of this data.

Note: Total reported is household income before taxes in 2013.
Sources: Investment Company Institute and U.S. Census Bureau. See ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014.”

U.S. households owning mutual funds had a range of annual incomes in mid-2014: 20 percent had annual income of less than $50,000; 21 percent had between $50,000 and $74,999; 19 percent had between $75,000 and $99,999; and the remaining 40 percent had $100,000 or more (Figure 6.6). The median income of mutual fund–owning households in mid-2014 was $85,000 (Figure 6.2).

Figure 6.6

Most Households That Own Mutual Funds Have Moderate Incomes

Percent distribution of all U.S. households and households owning mutual funds by household income, mid-2014

Figure 6.6

Download an Excel file of this data.

Note: Total reported is household income before taxes in 2013.
Sources: Investment Company Institute and U.S. Census Bureau. See ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014.”

Savings Goals of Mutual Fund Investors

Mutual funds play a key role in the savings goals of U.S. households—both long- and short-term. In mid-2014, 91 percent of mutual fund–owning households indicated that saving for retirement was one of their financial goals (Figure 6.2), and 74 percent said it was their primary financial goal. However, retirement is not the only financial goal for mutual fund–owning households—49 percent reported saving for emergencies as a goal; 49 percent reported reducing taxable income as a goal; and 23 percent reported saving for education as a goal (Figure 6.2).

Where Investors Own Mutual Funds

The importance that mutual fund–owning households place on retirement saving is reflected in where they own their funds—94 percent of these households held mutual fund shares inside employer-sponsored retirement plans, individual retirement accounts (IRAs), and other tax-deferred accounts in mid-2014. It also is reflected in the type of funds they choose, with households more likely to invest their retirement assets in long-term mutual funds than in money market funds. Indeed, defined contribution (DC) retirement plan and IRA assets held in equity, bond, and hybrid mutual funds totaled $6.9 trillion at year-end 2014, or 53 percent of those funds’ assets industrywide. By contrast, DC retirement plan and IRA assets in money market funds totaled just $364 billion, or 13 percent of those funds’ assets industrywide.

As 401(k) and other employer-sponsored DC retirement plans have grown more popular, the percentage of households that make their first foray into mutual fund investing inside these plans has increased. Among the households that bought their first mutual fund shares in 2005 or later, 68 percent did so inside an employer-sponsored retirement plan (Figure 6.7). Among those that bought their first mutual fund shares before 1990, only 57 percent did so inside an employer-sponsored retirement plan.

Figure 6.7

Employer-Sponsored Retirement Plans Are Increasingly the Source of First Mutual Fund Purchase

Percentage of U.S. households owning mutual funds, mid-2014

  Year of household’s first mutual fund purchase   Memo: all mutual fund–owning households
Before
1990
1990 to
1994
1995 to
1999
2000 to
2004
2005 or
later
Source of first mutual fund purchase    
Inside employer-sponsored retirement plan 57 62 69 74 68 64
Outside employer-sponsored retirement plan 43 38 31 26 32 36

Download an Excel file of this data.

Note: Employer-sponsored retirement plans include DC plans (such as 401(k), 403(b), or 457 plans) and employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs).
Source: ICI Research Perspective, “Characteristics of Mutual Fund Investors, 2014”

In mid-2014, 82 percent of mutual fund–owning households held funds inside employer-sponsored retirement plans, with 43 percent owning funds only inside such plans (Figure 6.8). Fifty-seven percent of mutual fund–owning households held funds outside employer-sponsored retirement accounts, with 18 percent owning funds only outside such plans. For mutual fund–owning households without funds in employer-sponsored retirement plans, 59 percent held funds in traditional or Roth IRAs. In many cases, these IRAs held assets rolled over from 401(k) plans or other employer-sponsored retirement plans (either defined benefit or DC plans).

Sources of Mutual Fund Purchases

Households owning mutual funds outside employer-sponsored retirement plans buy their fund shares through a variety of sources. In mid-2014, 80 percent of these households owned funds purchased with the help of an investment professional, including registered investment advisers, full-service brokers, independent financial planners, bank and savings institution representatives, insurance agents, and accountants (Figure 6.8). Forty percent of these households owned funds purchased solely with the help of an investment professional, while another 40 percent owned funds purchased from investment professionals and directly from fund companies, fund supermarkets, or discount brokers. Thirteen percent solely owned funds purchased directly from fund companies, fund supermarkets, or discount brokers.

Figure 6.8

82 Percent of Mutual Fund–Owning Households Held Shares Inside Employer-Sponsored Retirement Plans

Mid-2014

Figure 6.8

Download an Excel file of this data.

1 Employer-sponsored retirement plans include DC plans (such as 401(k), 403(b), or 457 plans) and employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs).
2 Investment professionals include registered investment advisers, full-service brokers, independent financial planners, bank and savings institution representatives, insurance agents, and accountants.
Source: ICI Research Perspective, “Characteristics of Mutual Fund Investors, 2014”

In mid-2014, about 46 percent of mutual fund–owning households held mutual funds through multiple sources: 15 percent held mutual funds both inside employer-sponsored retirement plans and through investment professionals; 5 percent held mutual funds both inside employer-sponsored retirement plans and directly from fund companies, fund supermarkets, or discount brokers; and 7 percent held mutual funds through investment professionals and directly from fund companies, fund supermarkets, or discount brokers (Figure 6.9). Sixteen percent owned mutual funds through all three source categories. Another 3 percent owned funds inside and outside employer-sponsored retirement plans, without specifying their outside purchase source. When owning funds through only one source category, the most common source was employer-sponsored retirement plans, at 43 percent.

Figure 6.9

Nearly Half of Mutual Fund–Owning Households Held Shares Through Multiple Sources

Percentage of U.S. households owning mutual funds, mid-2014

Figure 6.9

Download an Excel file of this data.

1 Employer-sponsored retirement plans include DC plans (such as 401(k), 403(b), or 457 plans) and employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs).
2 Investment professionals include registered investment advisers, full-service brokers, independent financial planners, bank and savings institution representatives, insurance agents, and accountants.
Note: Figure does not add to 100 percent because 4 percent of households owning mutual funds indicated that they owned funds outside of employer-sponsored retirement plans, but did not indicate which source was used to purchase funds. Of this 4 percent, 3 percent owned funds both inside and outside employer-sponsored retirement plans and 1 percent owned funds only outside of employer-sponsored retirement plans.
Source: ICI Research Perspective, “Characteristics of Mutual Fund Investors, 2014”

At year-end 2014, mutual funds held in DC plans and IRAs accounted for $7.3 trillion, or 29 percent of, the $24.7 trillion U.S. retirement market. The $7.3 trillion made up 46 percent of total mutual fund assets at year-end 2014. DC plans and IRAs held 53 percent of total assets in long-term mutual funds, but a much smaller share of total assets in money market funds (13 percent). Similarly, mutual funds held in DC plans and IRAs accounted for 55 percent of household long-term mutual funds but only 22 percent of household money market funds (Figure 6.10).

Figure 6.10

Households’ Mutual Fund Assets by Type of Account

Billions of dollars, year-end 2014

Figure 6.10

Download an Excel file of this data.

1 Mutual funds held as investments in 529 plans and Coverdell ESAs are counted in this category.
2 IRAs include traditional IRAs, Roth IRAs, and employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs).
3 DC plans include 401(k) plans, 403(b) plans, 457 plans, Keoghs, and other DC plans without 401(k) features.

Shareholder Sentiment, Willingness to Take Investment Risk, and Confidence

Each year, ICI surveys U.S. households about a variety of topics, including shareholder sentiment. In mid-2014, 68 percent of mutual fund–owning households familiar with mutual fund companies had “very” or “somewhat” favorable impressions of fund companies, the same as in 2013 (Figure 6.11). The share of mutual fund–owning households with “very” favorable impressions of fund companies, meanwhile, increased from 13 percent to 17 percent.

Figure 6.11

Most Shareholders View the Mutual Fund Industry Favorably

Percentage of mutual fund shareholders familiar with mutual fund companies, selected years

Figure 6.11

Download an Excel file of this data.

Source: ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014”

Among all U.S. households, the percentage willing to take above-average or substantial investment risk tends to move with stock market performance. U.S. households tend to become less tolerant of investment risk following periods of poor stock market performance. For example, willingness to take above-average or substantial investment risk fell from 23 percent in mid-2008, just before the 2007–2008 financial crisis hit, to 19 percent in mid-2009 (Figure 6.12). Not until mid-2013, more than four years after the stock market bottomed out, did willingness to take investment risk rebound.

Figure 6.12

Households’ Willingness to Take Investment Risk Tends to Move with the Stock Market

Percentage of U.S. households willing to take above-average or substantial investment risk and S&P 500, 1988–2014

Figure 6.12

Download an Excel file of this data.

Note: The S&P 500 is an index of 500 stocks chosen for market size, liquidity, and industry group representation.
Sources: ICI Annual Mutual Fund Shareholder Tracking Survey, Federal Reserve Board Survey of Consumer Finances (SCF), and Standard & Poor’s

Households owning mutual funds are far more willing to take investment risk than other households. In mid-2014, 31 percent of households owning mutual funds were willing to take above-average or substantial investment risk, more than twice the 13 percent of households not owning mutual funds (Figure 6.13).

Figure 6.13

Households’ Willingness to Take Investment Risk

Percentage of U.S. households by mutual fund ownership status, 2008–2014

Figure 6.13

Download an Excel file of this data.

Source: ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014”

As with their impressions of fund companies, shareholders’ confidence that mutual funds are helping them reach their financial goals declined in the wake of the financial crisis. In mid-2009, 72 percent of mutual fund shareholders said they were confident in mutual funds’ ability to help them achieve their financial goals, down from 85 percent the year before (Figure 6.14). From mid-2010 through mid-2014, about eight in 10 mutual fund–owning households said they were confident in mutual funds’ ability to help them achieve their financial goals, with more than 20 percent saying they were “very” confident.

Figure 6.14

More Than Eight in 10 Mutual Fund–Owning Households Have Confidence in Mutual Funds

Percentage of all mutual fund shareholders by level of confidence that mutual funds can help them meet their investment goals, 2005–2014

Figure 6.14

Download an Excel file of this data.

Note: This question was not included in the survey prior to 2005. The question has four choices; the other two possible responses are “not very confident” and “not at all confident.”
Source: ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014”

Shareholders’ Use of the Internet

Nearly all mutual fund–owning households have Internet access. In mid-2014, 94 percent of U.S. households owning mutual funds had Internet access (Figure 6.15), up from 68 percent in 2000 (the first year for which ICI collected data on shareholder access to the Internet). Internet access traditionally has been greatest among younger people—in both mutual fund–owning households and the general population. Increasing access among older shareholders, however, has narrowed the gap considerably.

Figure 6.15

Internet Access Is Nearly Universal Among Mutual Fund–Owning Households

Percentage of households with Internet access, mid-2014

  All U.S. households Mutual fund–owning households Households with DC plans1
Age of head of household2      
Younger than 35 86 96 96
35 to 49 88 95 95
50 to 64 81 95 93
65 or older 60 86 84
Education level
High school diploma or less 63 84 84
Some college or associate’s degree 85 95 94
College or postgraduate degree 92 97 97
Household income3
Less than $50,000 65 84 82
$50,000 to $99,999 90 94 95
$100,000 to $149,999 95 98 98
$150,000 or more 94 98 98
Total 79 94 93

Download an Excel file of this data.

1 DC plans include 401(k), 403(b), 457, and other DC plans.
2 Age is based on the sole or co-decisionmaker for household saving and investing.
3 Total reported is household income before taxes in 2013.
Note: Internet access includes access to the Internet at home, work, or some other location.
Source: ICI Annual Mutual Fund Shareholder Tracking Survey. See ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014.”