By the Numbers
FEBRUARY 06, 2017
94 million — Number of individual investors who owned mutual funds as of mid-2016
As of mid-2016, 94 million individuals owned mutual funds, marking a more than 50% jump from 1997, and an increase of about 2% from 2012, according to a recent report from the Investment Company Institute (ICI).
Nearly 55 million U.S. households, or 43.6%, owned mutual funds, compared with 5.9 million households that held exchange-traded funds (ETFs) and 2.8 million that owned closed-end funds, the survey found. Even among those households owning ETFs and closed-end funds, the vast majority — more than 8 out of 10 — also owned mutual funds.
The jump in mutual fund ownership in the 1980s and 1990s was largely attributable to the growth of 401(k) plans during that period. The stock market’s strong run in the latter half of the 1990s also added to the popularity of mutual funds as they represented an attractive means of entry to the market.
Mutual funds continue to dominate, in part, because they are a leading investment offering in 401(k) plans. The study found that more households own mutual funds inside tax-deferred accounts, such as 401(k)s and IRAs, than outside these accounts.
“For a wide range of people, mutual funds provide a cost-effective, diversified investment choice,” explains Sarah Holden, ICI’s senior director of retirement and investor research. “There is a fund for everyone: active, index, domestic or international stock funds, domestic or international bond funds, money market funds, or those that automatically rebalance — as target date funds do.”
Who owns mutual funds? People of all ages, but ownership is concentrated among individuals in their prime earning and saving years. More than six out of 10 (63%) households owning mutual funds were headed by individuals ages 35 to 64.
Even so, more than one third of millennial households own mutual funds, and they are buying them at a younger age than previous generations.
According to ICI’s research, millennials purchased their first mutual fund at age 23, on average, compared with Generation Xers who typically purchased their first mutual fund at age 27. Baby boomers, who make up the largest share of mutual fund-owning households as of mid-2016, got started in their 30s.
“Mutual funds are attractive across the life cycle,” Holden adds. “They appeal to investors of all ages, ranging from young millennials just starting their careers and holding mutual funds through their 401(k) plans at work, to older investors with rollover IRAs, to investors working with financial advisors to build their mutual fund portfolios.”
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.