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Letter from the ICI Research: Chapter 1: Chapter 2: Chapter 3: Chapter 5: Chapter 6: Chapter 7: |
Individual and Household Ownership of Mutual FundsIn 2010, an estimated 90 million individual investors owned mutual funds and held 87 percent of total mutual fund assets at year-end. Altogether, 51.6 million households, or 44 percent of all U.S. households, owned funds (Figure 6.1). 44 Percent of U.S. Households Owned Mutual Funds in 2010 Millions and percentage of U.S. households owning mutual funds, selected years
Download an Excel file of this data. Sources: Investment Company Institute and U.S. Census Bureau. See ICI Fundamentals, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2010.”
Mutual funds represented a significant component of many U.S. households’ financial holdings in 2010. Among households owning mutual funds, the median amount invested in mutual funds was $100,000 (Figure 6.2). Seventy-five percent of individuals heading households that owned mutual funds were married or living with a partner, and 46 percent were college graduates. Seventy-three percent of these individuals worked full- or part-time. Characteristics of Mutual Fund Investors May 2010
Download an Excel file of this data. Sources: Investment Company Institute and U.S. Census Bureau. See ICI Fundamentals, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2010”; ICI Fundamentals, “Characteristics of Mutual Fund Investors, 2010”; and Profile of Mutual Fund Shareholders, 2010.
Mutual Fund Ownership by Age and IncomeThe incidence of mutual fund ownership in 2010 was greatest among households in their peak earning and saving years, that is, between the ages of 35 and 64 (Figure 6.3). About half of all households in this age group owned mutual funds. Fewer than one-third of households younger than 35 and fewer than 40 percent of households aged 65 or older owned mutual funds. Mutual Fund Ownership Is Greatest Among 35- to 64-Year-Olds Percentage of U.S. households within each age group,* May 2010
Download an Excel file of this data. *Age is based on the age of the sole or co-decisionmaker for household saving and investing.
Among mutual fund–owning households in 2010, 67 percent were headed by individuals between the ages of 35 and 64 (Figure 6.4). Fifteen percent of mutual fund–owning households were headed by individuals younger than 35, and 18 percent were headed by individuals 65 or older. The median age of individuals heading households owning mutual funds was 50 (Figure 6.2). Like the U.S. population as a whole, the population of mutual fund–owning households is aging. Thirty-eight percent of mutual fund–owning households were headed by individuals 55 or older in 2010 compared with 26 percent in 1994 (Figure 6.4). The U.S. Population and Mutual Fund Shareholders Are Getting Older Percentage of households by mutual fund ownership status and age group,* May 2010
Download an Excel file of this data. *Total reported is household income before taxes in 2008.
The majority of U.S. households owning mutual funds had moderate incomes. One-quarter of mutual fund–owning households had household incomes of less than $50,000; 20 percent had household incomes between $50,000 and $74,999; 19 percent had incomes between $75,000 and $99,999; and the remaining 36 percent had incomes of $100,000 or more. The median household income of mutual fund–owning households was $80,000 (Figure 6.2). Although individuals across all income groups own mutual funds, households with higher incomes are more likely to own mutual funds than lower-income households. In 2010, 66 percent of all U.S. households with incomes of $50,000 or more owned mutual funds, compared with 22 percent of households with incomes of less than $50,000 (Figure 6.5). In fact, lower-income households are less likely to have any type of savings. The typical household with income less than $50,000 had $15,000 in savings and investments, while the typical household with incomes of $50,000 or more held $160,000 in savings and investments. Ownership of Mutual Funds Increases with Household Income Percentage of U.S. households within each income group,* May 2010
Download an Excel file of this data. *Total reported is household income before taxes in 2009.
Savings Goals of Mutual Fund InvestorsMutual funds play a key role in achieving both the long- and short-term savings goals of U.S. households. In 2010, 74 percent of mutual fund–owning households indicated that their primary financial goal for their fund investments was saving for retirement. Ninety-one percent of households that owned mutual funds held shares inside workplace retirement plans, individual retirement accounts (IRAs), and other tax-deferred accounts. Households were more likely to invest their retirement assets in long-term mutual funds than in money market funds. Defined contribution (DC) retirement plans and IRA assets held in stock, bond, and hybrid mutual funds totaled $4.3 trillion in 2010 and accounted for 48 percent of those funds’ assets, whereas retirement account assets in money market funds were $351 billion, or 13 percent of those funds’ assets. Retirement is not the only financial goal for households’ mutual fund investments. Half of mutual fund–owning households reported that reducing their taxable income was one of their goals; 47 percent listed saving for an emergency as a goal; and 25 percent reported saving for education among their goals (Figure 6.2). Where Investors Own Mutual FundsThe importance of retirement saving among mutual fund investors also is reflected in where they own their funds. As 401(k) and other employer-sponsored DC retirement plans have become increasingly popular in the workplace, the fraction of households that make their first foray into mutual fund investing inside their employer-sponsored retirement plans has increased. Among those households that made their first mutual fund purchase in 2005 or later, 72 percent did so inside an employer-sponsored retirement plan (Figure 6.6). Among those households that made their first purchase before 1990, 52 percent did so inside an employer-sponsored retirement plan. Employer-Sponsored Retirement Plans Are Increasingly the Source of First Fund Purchase Percentage of U.S. households owning mutual funds, May 2010
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).
In 2010, 68 percent of mutual fund–owning households owned funds inside employer-sponsored retirement plans, with 28 percent owning funds only inside such plans (Figure 6.7). Seventy-two percent of mutual fund–owning households owned funds outside of employer-sponsored retirement accounts, with 32 percent owning funds only outside such plans. However, 63 percent of mutual fund–owning households without funds in workplace accounts held funds in their IRAs and in many cases, these IRAs held assets rolled over from 401(k)s or other employer-sponsored retirement plans (defined benefit or DC plans). 72 Percent of Mutual Fund–Owning Households Held Shares Outside Employer-Sponsored Retirement Plans May 2010
Download an Excel file of this data. 1Employer-sponsored retirement plans include DC plans (401(k) plans, 403(b) plans, 457 plans, Keoghs, and other DC plans without 401(k) features) and employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs).
Sources of Mutual Fund PurchasesHouseholds owning mutual funds outside of workplace retirement plans purchased their funds through a variety of sources. Indeed, 81 percent of those that owned funds outside a workplace retirement plan held funds purchased through a professional adviser (Figure 6.7). Professional financial advisers include full-service brokers, independent financial planners, bank and savings institution representatives, insurance agents, and accountants. Forty-two percent of investors who owned funds outside employer-sponsored retirement plans owned funds solely through advisers, while another 39 percent owned funds purchased from advisers, fund companies directly, or discount brokers. Eleven percent solely owned funds purchased directly from fund companies or discount brokers. Adviser Contact in 2009 and 2010About half (51 percent) of all mutual fund–owning households indicated they had ongoing relationships with financial advisers (Figure 6.8). Between June 2009 and May 2010, nearly all households with advisers had contact with their advisers. Seventy-eight percent of shareholders who reported using an adviser indicated that both they and their advisers initiated contact during this time period. Another 12 percent reported contact initiated only by the shareholder, and 8 percent reported contact initiated only by their adviser. About Half of Mutual Fund Shareholders Used an Adviser May 2010
Download an Excel file of this data. Source: ICI Fundamentals, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2010”
Those who own funds outside DC retirement plans typically hold mutual funds in their investment portfolios for several years. On average, mutual fund accounts held outside retirement plans at work have been open for five years (Figure 6.9), and shareholders on average have had a relationship with the fund company offering the fund(s) for eight years (Figure 6.10). The Average Mutual Fund Account Has Been Open for Five Years Percentage of mutual fund accounts held outside DC retirement plans by age of account, year-end 2009
Download an Excel file of this data. The Average Shareholder Tenure with a Fund Company Is Eight Years Percentage of mutual fund shareholders by tenure of shareholder with the fund company, year-end 2009
Download an Excel file of this data. Shareholder Sentiment, Willingness to Take Investment Risk, and ConfidenceShareholder sentiment generally moves with stock market performance largely because of the impact on mutual fund returns. For example, mutual fund companies’ favorability rose in the late 1990s along with stock prices (measured by the S&P 500), then declined between May 2000 and May 2003 as stock prices fell, and increased between May 2003 and May 2007 as the stock market gained (Figure 6.11). Mutual Fund Shareholder Sentiment Rises and Falls with Stock Market Performance Percentage of mutual fund shareholders familiar with mutual fund companies, 1998–2010
Download an Excel file of this data. 1The mutual fund industry favorability rating is the percentage of mutual fund shareholders familiar with the mutual fund industry who have a “very” or “somewhat” favorable impression of the fund industry.
After falling during the market decline in 2008 and 2009, mutual fund favorability rebounded somewhat as the stock market gained in 2010. Sixty-seven percent of shareholders familiar with mutual fund companies had “very” or “somewhat” favorable impressions of fund companies in 2010, up from 64 percent in 2009 (Figure 6.11). Among all U.S. households, the percentage willing to take above-average or substantial investment risk tends to move with stock market performance (Figure 6.12). U.S. households become less tolerant of investment risk in times of poor stock market performance. For example, willingness to take risk is lower from 2008 to 2010, compared to time periods of higher stock market gains. Households owning mutual funds also have expressed less willingness to take investment risk in recent years. In May 2008, 37 percent of U.S. households owning mutual funds were willing to take above-average or substantial risk with their investments (Figure 6.13). By May 2010, this fraction had fallen to 31 percent of mutual fund–owning households. Households’ Willingness to Take Investment Risk Tends to Move with the S&P 500 Stock Index Measure is percentage of U.S. households willing to take above-average or substantial investment risk, 1988–2010
Download an Excel file of this data. Sources: ICI Annual Mutual Fund Shareholder Tracking Survey, Federal Reserve Board Survey of Consumer Finances (SCF), and Standard & Poor’s Households’ Willingness to Take Investment Risk Percentage of U.S. households by mutual fund ownership status; May 2008, May 2009, and May 2010
Download an Excel file of this data. Note: Components may not add to 100 percent because of rounding.
Investors’ confidence that mutual funds are helping them reach their financial goals declined a bit in the wake of the financial market crisis. In 2009, 73 percent of fund shareholders said they were confident in mutual funds’ ability to help them achieve their financial goals, compared to 85 percent in 2008 (Figure 6.14). In 2010, confidence rose: 79 percent of all fund shareholders said they were confident in mutual funds’ ability to help them achieve their financial goals. Indeed, nearly one-quarter of fund investors in 2010 were “very” confident that mutual funds could help them meet their financial goals. Mutual Fund Shareholders’ Confidence Rose in 2010 Percentage of all mutual fund shareholders by level of confidence that mutual funds can help them meet their investment goals, 2005–2010
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.” Shareholders’ Use of the InternetSome shareholders use the Internet to access fund and other investment information. In 2010, 89 percent of U.S. households owning mutual funds had Internet access (Figure 6.15), up from 68 percent in 2000—the first year in which ICI measured shareholders’ access to the Internet. Similar to all U.S. households and households owning DC plans, the incidence of Internet access traditionally has been greatest among younger mutual fund shareholders. Increases in Internet access among older shareholder segments, however, have narrowed the generational gap considerably. Overall, eight in 10 mutual fund–owning households with Internet access used the Internet daily. Internet Access Is Widespread Among Mutual Fund–Owning Households Percentage of households with Internet access, May 2005 and May 2010
Download an Excel file of this data. *Total reported is household income before taxes in prior year.
In 2010, 82 percent of shareholders with Internet access went online for financial purposes, most often to obtain investment information or check their bank or investment accounts (Figure 6.16). In addition, mutual fund–owning households were much more likely than non-fund-owning households to engage in common online activities, such as accessing email, obtaining information about products and services other than investments, or purchasing products and services other than investments. Most Mutual Fund Shareholders Used the Internet for Financial Purposes Percentage of fund-owning and non-fund-owning households with Internet access by online activities,1, 2 May 2010
Download an Excel file of this data. 1Online activities are based on the sole or co-decisionmaker for household saving and investing.
Younger shareholders, shareholders with higher education levels, and shareholders with higher household incomes all reported the highest levels of Internet use for financial and nonfinancial purposes (Figure 6.17). About nine in 10 members of these groups indicated using the Internet for these online tasks. Mutual Fund Shareholders’ Use of the Internet by Age, Education, and Income for 2010 Percentage of U.S. households with Internet access by mutual fund ownership and online activities in past 12 months,1, 2 May 2010
Download an Excel file of this data. 1Online activities are based on the household’s sole or co-decisionmaker for saving and investing. Institutional OwnershipNonfinancial businesses, financial institutions, nonprofit organizations, and other institutional investors held 13 percent of mutual fund assets at year-end 2010 (Figure 6.18). Institutional investor data exclude mutual fund holdings by fiduciaries, retirement plans, and variable annuities, which are considered to be held primarily by individual investors. Institutional and Household Ownership of Mutual Funds Billions of dollars, year-end 2010
Download an Excel file of this data. 1Mutual funds held as investments in variable annuities and 529 plans are counted as household holdings of mutual funds.
As of year-end 2010, nonfinancial businesses were the largest segment of institutional investors in mutual funds, holding $730 billion in corporate and similar accounts. These firms primarily use mutual funds as a cash management tool, and 71 percent of their mutual funds holdings were money market funds. Business investments in funds do not include assets held by funds in retirement plans on behalf of employees in employer-sponsored retirement plans, since those assets are considered employee assets rather than employer assets. Financial institutions—which include credit unions, investment clubs, banks, and insurance companies—were the second-largest component of institutional investors in mutual funds. Financial institutions held $544 billion in fund assets at year-end 2010. Nonprofit organizations and other institutional investors held $131 billion and $141 billion, respectively, in mutual fund accounts. Institutional investors overwhelmingly held money market funds as the primary type of mutual fund. Across all types of institutional investors, 63 percent of investments in mutual funds were in money market funds at year-end 2010. For More Information
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