They’re maligned, mocked and mistreated anytime a “hot, new thing” comes along promising lower fees, better transparency and tax efficiency, but mutual funds are still the mainstay for most American investors, including 401k participants.
The Investment Company Institute finds that among the 56.2 million mutual fund-owning households in the United States, 81 percent purchased their funds through employer-sponsored retirement plans, such as 401k plans.
Sixty-four percent held mutual funds outside employer-sponsored retirement plans, and 45 percent held mutual funds both inside and outside such plans.
Shareholders purchasing funds outside of employer-sponsored retirement plans use a wide variety of financial services providers. In mid-2017, 50 percent of mutual fund-owning households had purchased mutual funds from an investment professional, such as a full-service broker, independent financial planner, or bank or insurance company representative.
Thirty-six percent of mutual fund-owning households held their funds directly through discount brokers or mutual fund companies.
“Mutual funds are an important component of investor portfolios,” said ICI Senior Director of Retirement and Investor Research Sarah Holden. “The survey results indicate that almost two-thirds of mutual fund-owning households had more than half of their household financial assets invested in mutual funds.”
Overall, the vast majority of American mutual fund shareholders are confident in mutual funds’ ability to help them meet their financial goals, with the number of mutual fund shareholders in the United States at 100 million, representing 44.5 percent of all households.
ICI’s research, released on Tuesday in two studies—“Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2017” and “Characteristics of Mutual Fund Investors, 2017”—also find that mutual fund-owning households represent a full range of ages, incomes, and educational achievement.
Other Key Survey Findings Include:
- Mutual fund-owning households often held several funds, and equity funds were the most commonly owned type of mutual fund. Among households owning mutual funds in mid-2017, 83 percent held more than one mutual fund and 87 percent owned equity funds.
- Almost all mutual fund investors were focused on saving for retirement. Saving for retirement was a financial goal for 92 percent of mutual fund-owning households, and 75 percent indicated that retirement saving was their household’s primary financial goal.
- The incidence of mutual fund ownership was highest among the Baby Boom Generation and Generation X. In mid-2017, nearly half of Baby Boom households and more than half of Gen X households owned mutual funds. Overall, Baby Boom households were 37 percent of households owning mutual funds and Gen X households were 33 percent. Nearly four in 10 Millennial households owned mutual funds; such households constitute one-fifth of mutual fund-owning households.
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.
