In something of a surprise, given the perceived ignorance on the part of the general public about investment costs, the vast majority of mutual fund investors do, in fact, consider fees and expenses when selecting a fund, according to survey results released on Monday by the Investment Company Institute (ICI).
The report found that nearly nine in 10 mutual fund–owning households reviewed the fees and expenses of a fund in 2020, with 40% indicating that this information was “very important” to their fund selection decision.
The survey results, “What US Households Consider When They Select Mutual Funds, 2020,” also found that more than nine in 10 mutual fund investors considered the historical performance of a fund, with half saying this information was “very important” to their fund purchase decisions.
“Investors consider a variety of factors when choosing mutual funds, including the fund’s fees and expenses, the historical performance of the fund, and the risk level of the fund’s investments,” ICI Senior Director of Retirement and Investor Research Sarah Holden said in a statement. “By carefully considering all aspects of a mutual fund, investors are able to make informed choices as they save for retirement and other financial goals.”
Investors consider a fund’s objective, risks, and ratings
In 2020, 91% of mutual fund–owning households considered the fund’s investment objective when selecting a mutual fund, with 35 percent agreeing it was “very important.”
Similarly, 91% also considered the risk level of a fund’s investments when selecting mutual funds, with 38 percent indicating it was “very important” in their decision-making.
Additionally, 76 % of mutual fund–owning households said they consider a fund’s rating from a rating service, with 19% considering such a rating “very important” when selecting their funds.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
