Frequently Asked Questions About Mutual Fund Shareholders

How many American households own mutual funds?
How would you describe the average household owning mutual funds?
Why do households invest in mutual funds?
How significant are mutual funds to U.S. households’ financial holdings?
What types of mutual funds do people own?
How much financial risk are mutual fund shareholders willing to take?
How many years have U.S. households owned mutual funds?
How are U.S. households introduced to mutual funds?
How do most U.S. households purchase mutual funds?
How does ICI gather information about mutual fund shareholders?
Where can I get more information about mutual fund shareholders?

How many American households own mutual funds?

In 2008, an estimated 52.5 million households, or 45 percent of all U.S. households, owned mutual funds. The current estimate of the number of individual investors owning mutual funds is 92 million, an increase of almost 4 million from the estimate for 2007.

U.S. Household Ownership of Mutual Funds, 1996–2008
Millions, selected years

Sources: Investment Company Institute and U.S. Census Bureau

How would you describe the average household owning mutual funds?

In 2008, the “typical” mutual fund–owning head of household:

• was middle-aged, employed, educated, married or living with a partner, and shared investment decisionmaking with his or her spouse or partner;
• was of moderate financial means, with $80,000 in household income and $200,000 in household financial assets;
• owned investments other than mutual funds, including individual stocks, and had over half of the household’s financial assets (excluding the primary residence) invested in mutual funds;
• owned mutual funds inside an employer-sponsored retirement plan, such as a 401(k) plan, 403(b) plan, 457 plan, SEP IRA, SAR-SEP IRA, or SIMPLE IRA;
• also owned mutual funds outside employer-sponsored retirement plans, primarily through the sales force channel (which includes full-service brokers, independent financial planners, bank or savings institution representatives, insurance agents, and accountants); and
• was confident that mutual funds could help him or her reach financial goals.

Members of the Baby Boom Generation (individuals born between 1946 and 1964) make up 46 percent of mutual fund shareholders, while members of Generation X (individuals born between 1965 and 1976) make up 24 percent of fund holders. Members of the Silent Generation (individuals born prior to 1946) account for 18 percent of fund shareholders and members of Generation Y (individuals born after 1976) account for 12 percent.

Why do households invest in mutual funds?

Mutual fund–owning households have a variety of financial goals for their mutual fund investments. In 2008, the vast majority (95 percent) indicated they were using mutual funds to save for retirement; 76 percent indicated that saving for retirement was their household’s primary financial goal. Many mutual fund–owning households (47.5 million) held funds in tax-deferred savings accounts. Nevertheless, 16.7 million U.S. households held long-term mutual funds (stock, bond, and balanced/hybrid funds) in taxable accounts in 2008.

Retirement is not the only financial goal for households’ mutual fund investments. About half (52 percent) of mutual fund–owning households reported that reducing their taxable income was one of their goals; 45 percent listed saving for an emergency as a goal; and 25 percent reported saving for education among their goals.

How significant are mutual funds to U.S. households’ financial holdings?

Mutual funds represented a significant component of many U.S. households’ financial holdings in 2008. Among households owning mutual funds, the median amount invested in mutual funds was $100,000. Mutual fund holdings represented more than half of household financial assets for 69 percent of households that owned mutual funds.

What types of mutual funds do people own?

In 2008, the typical mutual fund–owning household had $100,000 invested in four mutual funds, including at least one equity fund. Equity funds were the most commonly owned type of mutual fund, held by 80 percent of mutual fund–owning households. Thirty-eight percent owned hybrid funds, 48 percent owned bond funds, and 66 percent owned money market funds. In addition, 43 percent of mutual fund–owning households owned global or international funds.

Equity Funds Are the Most Commonly Owned Mutual Fund
Percentage of U.S. households owning mutual funds, 2008

Note: Multiple responses are included.
Source: Investment Company Institute Annual Mutual Fund Shareholder Tracking Survey

How much financial risk are mutual fund shareholders willing to take?

In 2008, almost all shareholders were willing to take some financial risk for financial gain. Thirty-seven percent of shareholders said they were willing to take substantial or above-average financial risk for similar levels of financial gain. The largest percentage of shareholders, 50 percent, were willing to take average risk for average gain. Thirteen percent were willing to take below-average risk for below-average gain or were unwilling to take any financial risk. 

How many years have U.S. households owned mutual funds?

The vast majority of mutual fund–owning households have invested in mutual funds for many years. In 2008, 39 percent had bought their first mutual fund before 1990; 19 percent had purchased their first fund between 1990 and 1994; and 20 percent had bought their first fund between 1995 and 1999. Twenty-two percent had bought their first fund in 2000 or later.

How are U.S. households introduced to mutual funds?

Mutual fund–owning households often purchase their first mutual fund through employer-sponsored retirement plans: 59 percent purchased their first fund through that channel. Households that made their first mutual fund purchase more recently were more likely to have done so through employer-sponsored retirement plans. Among households that bought their first mutual fund in 2000 or later, 68 percent bought that first fund through such a plan, compared with 53 percent of households that first purchased mutual funds before 1990.

Employer-Sponsored Retirement Plans Are Increasingly the Source of First Fund Purchase
Percentage of U.S. households owning mutual funds, 2008

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: Investment Company Institute Annual Mutual Fund Shareholder Tracking Survey

How do most U.S. households purchase mutual funds?

In 2008, 68 percent of mutual fund–owning households owned funds through employer-sponsored retirement plans. Seventy-three percent of mutual fund–owning households owned mutual funds purchased outside employer-sponsored retirement plans. Among these households, 56 percent owned mutual funds purchased from the sales force channel, which includes full-service brokers, independent financial planners, bank or savings institution representatives, insurance agents, and accountants; and 35 percent owned fund shares purchased from the direct market channel, which consists of purchases made directly from fund companies and through discount brokers.

Fifty-one percent of mutual fund–owning households considered employer-sponsored retirement plans to be their primary source for purchasing mutual funds. Thirty-six percent reported the sales force channel to be their primary source for purchasing funds, and 13 percent cited the direct market channel.

How does ICI gather information about mutual fund shareholders?

ICI conducts the Annual Mutual Fund Shareholder Tracking Survey each spring to gather information on the demographic and financial characteristics of mutual fund–owning households in the United States. The most recent survey was undertaken in May 2008 and was based on a sample of 4,100 U.S. households selected by random digit dialing, of which 1,844 households, or 45.0 percent, owned mutual funds. Eligible households included those owning mutual funds inside or outside employer-sponsored retirement plans. All interviews were conducted over the telephone with the member of the household who was the sole or co-decisionmaker most knowledgeable about the household’s savings and investments.

Where can I get more information about mutual fund shareholders?

For more information about mutual fund shareholders, please see the following ICI publications:

• Profile of Mutual Fund Shareholders, 2008
• Characteristics of Mutual Fund Investors, 2008
• Investment Company Fact Book: A Review of Trends and Activity in the Investment Company Industry

September 2009