Frequently Asked Questions About Mutual Fund Shareholders

How many individuals own mutual funds?
An estimated 88 million individuals in 50.6 million U.S. households -- representing 44 percent of all U.S. households -- owned mutual funds in 2007, according to a survey by the Investment Company Institute.

What are recent mutual fund ownership trends?
Today, three out of every ten individuals in the United States is a mutual fund shareholder, making mutual funds one of the most widely held types of investment. Fund ownership among U.S. households increased steadily throughout the 1990s, before declining slightly from a high of 51.7 million households in 2001.

U.S. Household Ownership of Mutual Funds, 1995-2007
(in millions)

Who is a typical mutual fund shareholder?
Mutual fund shareholders are, in many respects, a reflection of middle America. ICI research finds that the "typical" shareholder is married, middle-aged, college-educated, employed, and has a median household income of $68,700. Members of the Baby Boom Generation (individuals born between 1946 and 1964) make up 49 percent of mutual fund shareholders, while members of Generation X (individuals born between 1965 and 1976) include 24 percent of fund holders. Members of the Silent Generation (individuals born prior to 1946) account for 23 percent of fund shareholders and members of Generation Y (individuals born after 1976) comprise 4 percent.

Why do shareholders invest in mutual funds?
Saving for retirement is the primary financial goal of the majority of mutual fund investors. The vast majority of fund shareholders regard themselves as long-term investors and are not overly concerned with short-term market fluctuations. Fund shareholders own funds for a variety of reasons, including the investment diversification funds provide, the availability of a range of fund choices, and the level of fund fees and expenses.

How do most shareholders purchase funds?
More than 80 percent of shareholders who own mutual funds outside defined contribution retirement plans purchased these funds through intermediaries, such as brokers, banks, or financial planners. Nearly three-fifths -- 59 percent -- of all mutual fund shareholders identify a defined contribution retirement plan as their primary method for purchasing mutual funds, and 58 percent bought their first fund through these plans. Thirty percent of all shareholders consider a professional financial adviser as their primary purchase source while 11 percent regard fund companies or discount brokers as their primary purchase source.

What percentage of shareholders own funds through tax-deferred accounts?
Ninety percent of mutual fund shareholders own funds through tax-deferred accounts, such as 401(k) or other defined contribution plan participant accounts or Individual Retirement Accounts. Within that 90 percent share of fund-owning U.S. households, 57 percent own funds solely inside tax-deferred accounts and33 percent own funds both inside and outside these tax-deferred accounts.

Fund Ownership Inside and Outside Tax-Deferred Accounts, 2007
(percent of U.S. shareholders)

Who makes the investment decisions in fund-owning households?
The investment decisionmaking is shared in more than half of fund-owning households. Males are the sole investment decisionmakers in 23 percent of fund-owning households, females in 21 percent.

What percentage of household assets do mutual funds represent?
Mutual fund assets typically represent 47 percent of household financial assets. The typical fund-owning household has a median of $48,000 invested in four mutual funds and has total household financial assets of $125,000.

What types of mutual funds do shareholders own?
Equity funds are the most widely held type of fund, owned by 80 percent of shareholders. Forty-nine percent of shareholders own money market funds, 44 percent own bond funds, and 34 percent own hybrid funds, which invest in a mix of stocks and bonds.

Types of Mutual Funds Owned by Fund Shareholders

How many years have shareholders owned funds?
Most fund shareholders have held mutual funds for a considerable length of time. Most recent data indicate that 70 percent had made their first mutual fund purchase before 1995. Ninety-three percent have continuously owned funds since purchasing their first fund, though not necessarily the same funds.

Are fund shareholders willing to take risk with their fund investments?
Fund shareholders are willing to take some risk when investing in funds. Nearly half, 49 percent, say they will assume average risk for average gain; 35 percent are willing to take at least above-average risk for above-average gain. Also, nearly all shareholders acknowledge that investing in equity or bond mutual funds involves accepting some degree of risk. Fund shareholders consider this risk based on their own personal time frame -- 69 percent have a time frame of more than five years.

December 2007