Home

PDF Version

Letter from the
Chief Economist

ICI Research:
Staff and Publications

Chapter 1:
Overview of U.S.-Registered Investment Companies

Chapter 2:
Recent Mutual Fund Trends

Chapter 3:
Exchange-Traded Funds

Chapter 4:
Closed-End Funds

Chapter 5:
Mutual Fund Fees and Expenses

Chapter 6:
Characteristics of Mutual Fund Owners

Chapter 7:
Retirement and Education Savings

Data Tables

Appendix A:
How U.S.-Registered Investment Companies Operate and the Core Principles Underlying Their Regulation

Appendix B:
Significant Events in Fund History

Glossary

Fact Book Archive

Letter from the Chief Economist

Brian Reid
Chief Economist of the Investment Company Institute

One of the aspects of my job that I enjoy the most is visiting our member firms to update them on issues in Washington or trends among funds and investors. While the purpose of my visits is for me to inform members, in truth, these presentations serve more to launch conversations in which I learn from them about the asset management business. These conversations provide color and context for the data that we gather, and they highlight new developments among funds and their shareholders.

Each year, the annual update of the Fact Book gives us an opportunity to present a broad overview of the investment landscape by recording in a single volume some of the insights from these meetings and from our own research. Sometimes the developments are slow, and the picture barely changes from one year to the next. In other years, there are large shifts that permanently affect the investment management business.

To capture these trends, Senior Economist Rochelle Antoniewicz and Senior Director of Statistical Research Judy Steenstra, who lead ICI Research’s efforts to update the Fact Book, decide early each winter what modifications need to be made to the volume’s seven chapters and nearly 170 charts and tables. Often, changes from one year to the next, like those in the fund business, are incremental: we expand on an existing topic, add a new chart or table, or even remove material that has become less relevant. Sometimes, sweeping revisions are needed, and we reorganize one or more chapters. With each rewrite, the chapter’s author has an opportunity to restructure the material to reflect how funds and investing behavior have changed over time.

This year, Senior Economist Peter Brady rewrote Chapter 7, which examines the role that mutual funds play in the retirement and education savings markets. For example, you will see an expanded discussion of target date funds, which have become a popular investment within 401(k) and other defined contribution plans.

Peter also has done extensive research on how people prepare for retirement, and he discusses some of this work in the restructured chapter. I find it notable that many of the Baby Boomers who are in or nearing retirement will draw income from many of the same sources on which their parents relied. Social Security, for example, continues to play a key role in providing income security for many retired Americans because it replaces a large share of annual labor income for many low- to moderate-income families. At the same time, the creation of IRAs in the 1970s and the expansion of 401(k)s and other defined contribution plans in the past two decades have given these workers new ways to save for retirement.

Exchange-traded funds provide another example of how changes in the fund industry drive ICI Research and the composition of the Fact Book. The development of this investment product has been quite rapid. In the past decade, ETF assets have grown from $66 billion to $992 billion, making them the second most common type of registered investment company. Three years ago we included ETFs in a chapter that focused on indexing and index funds, with an emphasis on equity funds. In 2009, we dedicated a separate chapter to ETFs, reflecting both their rapid asset growth and their increasing diversity as they expand to include actively managed funds and funds investing in commodities, fixed-income securities, and a variety of other forms.

In other ways, investing trends have come full circle. While researchers and journalists tend to focus on domestic stock mutual funds, today the assets of fixed-income funds—money market and bond funds—nearly equal those of stock funds. Table 3 in the data section tells us this is not the first time that this has occurred. Stock funds dominated fund investing following the passage of the Investment Company Act of 1940. But successive bear markets in stocks in the 1970s along with rising interest rates drew investors into a growing number of bond and money market funds. By 1979, these funds managed more assets than stock funds, and they remained the dominant form of fund investing as recently as 1995.

As I read this year’s Fact Book one last time before it goes to the printer, I am reminded how much both funds and their investors have changed over time. The Fact Book also has evolved, by reflecting our current research and analysis. What has not changed is our mission. ICI Research seeks to bring together the highest quality data and scholarship about investment companies, fund shareholders, and retirement markets; to serve as a resource for ICI members, educators, government officials, journalists, and the general public; and to facilitate sound, well-informed public policies affecting investment companies, their investors, and the retirement markets.

This mission is central to the work of every member of the ICI Research Department. Each spring we dedicate months of effort, bringing together our talents and deep knowledge of funds and their investors, to publish the latest edition of the Fact Book. Thank you for your continued interest and feedback on our research and publications.

Back to Top