2020 Investment Company Fact Book: Letter from the Chief Economist

By Sean Collins

May 19, 2020

A version of this letter by ICI Chief Economist Sean Collins was released in the Institute’s 60th edition of the Investment Company Fact Book.

This year, we mark the 60th edition of the Investment Company Institute’s annual Investment Company Fact Book.

As I reviewed our Fact Book library in anticipation of writing this letter, it wasn’t hard to see both the evolution of Fact Book as a publication and the evolution of its content reflecting the development of the industry it chronicles. Much has changed.

For example, about 60 years ago, assets in equity and bond mutual and closed-end funds totaled $21 billion, or about 4 percent of US gross domestic product (GDP). Products such as money market funds, index funds, exchange-traded funds (ETFs), and target date and lifestyle funds weren’t yet a figment in anyone’s imagination. In 2019, assets in all US‑regulated funds totaled more than $26 trillion, about 120 percent of GDP.

As the industry goes, so goes our Fact Book. If you pick up any of our early editions, you will immediately note their slenderness—almost like a pamphlet—at fewer than 25 pages, fewer than 10 charts and tables, and printed in black and white. There also was a heavy emphasis on marketing and education. Text focused on things such as acquainting investors with mutual fund features and concepts, some now antiquated (“What are accumulation, voluntary, and contractual fund plans?”).

This year’s Fact Book is more than 300 pages, has nearly 200 charts and tables, and is in full color. And as funds have become thoroughly woven into the financial life of so many Americans, Fact Book has shifted away from marketing to deep financial analysis and has expanded to keep pace with industry growth and developments. For example, we have added chapters devoted to the worldwide fund industry (chapter 1), ETFs (chapter 4), closed-end funds (chapter 5), characteristics and behavior of fund investors (chapter 7), and the vast market for retirement-related products (chapter 8). The review of the previous calendar year’s developments in mutual funds (chapter 3) is itself 24 pages—about as long as the early editions of Fact Book in their entirety.

But it was satisfying to see that some things remain the same—as Fact Book and the industry have developed and matured, the dedicated constants of both haven’t changed. Fact Book is still the most objective, valuable source of data and information on the scale, operations, and uses of mutual funds and other investment companies. And the industry continues to serve Main Street investors, earning and keeping their trust, and helping them save for long‑term goals through a wide array of financial products.

The last thing that I noted in my Fact Book review was the degree to which it has reflected the role of funds in the financial markets. The reactions of funds and their investors to such stressful financial events as the 1970s energy crisis, Black Monday in 1987, the dot-com bubble, and the global financial crisis of 2007–2009 help inform and provide context for our economic analysis of current events. That said, you won’t find discussion in this 60th edition of Fact Book of the impact of COVID-19 on the industry. The Fact Book deals with the developments and data of the previous calendar year—in this case, through December 2019. So, while our weekly, monthly, and quarterly releases track the effects of the pandemic on funds and investors, next year’s Fact Book will provide the annual overview.

Beyond that, in today’s unprecedented circumstances, we, like the industry at large, have needed to adopt new approaches to complete our work. For example, our dedicated Research, Content, and Design teams have labored remotely to deliver this essential resource.

Another new aspect has been our decision to initially publish this year’s Fact Book only online, with a print edition to appear when pandemic-related restrictions recede. I look forward to seeing this year’s print edition in our library. And I know another ICI chief economist in decades to come will turn to it in contemplation of the evolution of the industry and of Fact Book.

In the meantime, please read the first electronic-only version of the Fact Book, and know that you have our best wishes for your health and well-being.

Permalink: https://www.ici.org/viewpoints/20_view_collinsfactbook

TOPICS: Financial Markets Fund Regulation Global Investor Research Mutual Fund Policy Research Retirement Policy Retirement Research Savings Shareholder

2020 Investment Company Fact Book: Letter from the President and CEO

By Paul Schott Stevens

May 13, 2020

This ICI Viewpoints is a version of a letter from ICI President and CEO Paul Schott Stevens that was released in the 60th edition of the Investment Company Fact Book.

2019 Annual Report to Members: ICI's International Work

By Miriam Bridges

November 21, 2019

With the industry's interests bound ever more tightly to global trends, ICI pursues an active international agenda through its international arm, ICI Global. ICI’s international work in 2019 was a period of vigorous effort on a host of issues....

ICYMI: A Q&A with Members of ICI's Retirement Team

November 19, 2019

For this year's 2019 Annual Report to Members, four members of ICI's retirement team sat down to discuss ICI's legislative, regulatory, research, and communications activities to advocate for well-informed public policies that help Americans prepare for retirement....

2019 Annual Report to Members: A Letter to ICI's Membership

By George C. W. Gatch and Paul Schott Stevens

November 14, 2019

What follows is an abridged version of a letter by ICI Chairman George C. W. Gatch and ICI President and CEO Paul Schott Stevens that was released in ICI’s 2019 annual report. To read their full letter, please see ICI’s 2019 Annual Report to Members....

Critics Claim Retirement Savers Aren’t Behaving Rationally. The Data Say They Are.

By Peter Brady

August 22, 2019

In a letter to MarketWatch responding to “Opinion: This Recent Report Suggests Steady Saving for Retirement Is Not Important,” published August 14, ICI Senior Economic Adviser Peter Brady refutes claims that criticize ICI’s recent retirement research, noting that more people benefit from employer plans than is commonly understood….

2019 Investment Company Fact Book: Letter from the Chief Economist

By Sean Collins

May 7, 2019

Globalization has hit a few speed bumps in recent years, but it hasn't slowed the globalization of the Investment Company Fact Book. Consistent with ICI’s mission to represent the interests of regulated funds and their investors worldwide, Fact Book is expanding its international presence....

Don’t Forget the 401(k): America’s Retirement System Helps Workers Save and Preserve Assets

By Paul Schott Stevens

February 26, 2019

In a letter to the Wall Street Journal responding to “Forget the 401(k),” published February 11, ICI President and CEO Paul Schott Stevens shows how the US retirement system actively engages employers to promote workers' retirement saving, noting that the current system also preserves choice and control of investments....

Mutual Funds: Rated E for Everyone

By Sarah Holden

December 12, 2018

Investing is subject to many misconceptions, including the notion that only wealthy households own mutual funds. As US households’ ownership of mutual funds has grown over the past four decades, the need to correct myths about who owns mutual funds has also grown....

ICI’s 2018 Annual Report: Letter from the President

By Paul Schott Stevens

December 3, 2018

A version of this letter by ICI President and CEO Paul Schott Stevens was released in the Institute’s 2018 Annual Report.

Fund industry watchers will remember this year as one of important policy developments, including some that have been the subject of years of debate. The Investment Company Institute has been deeply engaged in this wide range of issues, working on both legislative and regulatory fronts to promote advantageous outcomes for regulated funds and their shareholders....

Growing Better with Age: The 401(k) Turns Forty

By Miriam Bridges and Christina Kilroy

November 30, 2018

This month marks the fortieth birthday of the most prevalent retirement plan available to workers today: the 401(k). It’s a milestone, to be sure, but there are no mid-life doldrums here—401(k) plans continue to grow, and currently hold $5.3 trillion in assets on behalf of more than 55 million active participants and millions of former employees and retirees.

Stock Ownership in the United States: It’s Main Street

By Sarah Holden

September 10, 2018

US household activity in the stock market has undergone a transformation over the past three decades. The old idea that investing in the stock market is just for the wealthy is vastly out of date.

In the late 1980s, less than a third of US households held stocks. Now, a majority do. This growth in stock-owning households has occurred across all income quintiles....

2018 Investment Company Fact Book: Letter from the Chief Economist

By Sean Collins

May 15, 2018

Those of us who wear glasses know that one of the most crucial elements in seeing the world is the right lens. A bad lens warps the light and distorts the signals; the right lens sharpens the image and enhances our understanding.

This is a useful metaphor for the work that ICI Research does in providing informed analysis to guide public policy. Through our voluminous collections and surveys, we gather large amounts of data—signals about the behavior of funds, markets, and investors. But finding the patterns in these signals requires the right lens—accumulated knowledge provided by context, economic insights, and understanding of institutions.

The Investment Company Fact Book is one very visible result of this process and its many elements...

A More Accurate Evaluation of Retirement Plan Participation

By Miriam Bridges

May 2, 2018

What’s the actual participation rate of Americans preparing for retirement through a workplace retirement plan? It’s an important question, and one that ICI economists Peter Brady and Steven Bass shed some light on in their new analysis of tax data, “Who Participates in Retirement Plans, 2014.”

The retirement plan participation rate—often used to evaluate the performance of the US voluntary employer plan system—understates the true scope and importance of these plans. In their careful analysis, Brady and Bass give two reasons for this understatement...

Americans: In Defined Contribution We Trust

By Sarah Holden

March 8, 2018

Millions of Americans personally direct their retirement investments in defined contribution (DC) plans, which account for nearly $8 trillion in savings. Because it is vitally important that regulators, policymakers, and employers understand the beliefs and behaviors of these investors, ICI asked Americans what they thought of DC retirement plan accounts, which include 401(k) and 403(b) accounts.

The results, which we summarized in “American Views on Defined Contribution Plan Saving, 2017,” were clear: whether they had DC accounts or not, Americans appreciate DC plan accounts and are confident that these plans can help people meet their retirement goals...

States Are Abusing Abandoned-Property Funds to Plug Budget Shortfalls

By Tamara K. Salmon

January 11, 2018

Imagine finding out that your investment account has been turned over to your state because it was considered “abandoned.” Imagine, too, that after the account was turned over to the state, the account received a capital gains distribution. As a result, you are liable for paying the taxes on that distribution—and can be assessed monetary penalties for not paying the taxes in a timely fashion.

Let’s Give the US Retirement System the Credit It Deserves

By Sarah Holden

December 27, 2017

The Washington Post’s latest article on the future of retirement security (“‘I Hope I Can Quit Working in a Few Years’: A Preview of the US Without Pensions,” December 23) is not a preview but a retrospective look at some of the challenges that workers face in defined benefit (DB) pension plans even at “blue-chip” firms. As documented in the article, with traditional DB plans, workers often failed to get their full promised benefits, thanks to vesting rules, back-loaded benefit accrual, business failure, and labor mobility.

Congress Must Spike “FIFO” for All Investors

By Paul Schott Stevens

December 8, 2017

As the House and Senate reconcile their differing versions of tax reform, one provision from the Senate’s bill should be deleted immediately. Tax reform must not impose an accounting system known as “first-in, first-out” (FIFO) that would deprive America’s investors of their long-standing ability to manage their finances for the greatest tax efficiency.

2017 Annual Report to Members: A Message from the Chairman

By William F. “Ted” Truscott

November 13, 2017

This letter by ICI Chairman Ted Truscott was released in our 2017 Annual Report to Members.

Every day, I’m reminded that each of us in the fund industry is driven to deliver ever-greater value for our fees and keep improving service to fund shareholders. Investors are demanding more from every asset manager—and the resulting competition drives us to innovate, find new efficiencies, and offer even better solutions for investors’ needs.

In Reality, Data Tell a Different Story of Old Age in America

By Sarah Holden

October 10, 2017

“The New Reality of Old Age in America” (September 30) portrays economic security in retirement by pairing anecdotes about workers who have fared poorly with selected statistics. Comprehensive data on how our system is working overall tell a far different story: America’s retirement system enables most of today’s retirees to maintain their standards of living.

DOL Fiduciary Rule Review Is Opportunity for SEC

By Paul Schott Stevens

August 8, 2017

The following ICI Viewpoints is an op-ed by Paul Schott Stevens that was published in InvestmentNews on August 7, 2017.

Securities and Exchange Commission (SEC) Chairman Jay Clayton deserves credit for his decisive action inviting public feedback on the standards of conduct for financial advisers to retail investors. He now has a critical window of opportunity to press forward and work with the Department of Labor (DOL) to establish a consistent best-interest standard of conduct that applies uniformly across retirement and non-retirement accounts, while preserving investor choice.

2017 Investment Company Fact Book: Letter from the Chief Economist

By Brian Reid

April 27, 2017

Have you ever tried to put a jigsaw puzzle together without knowing what the finished work should look like? It’s difficult—even with help from family and friends. Are those blue pieces part of a peaceful lake or a cloudless sky? Are those dark pieces a forest floor or storm clouds brewing on the horizon? Without the completed picture on the puzzle box as a guide, everyone has their own idea of what the completed work will look like and how to put it together.

Scratch That: Why Arguments of a Broken Retirement System Are Misguided

By Peter J. Brady

April 6, 2017

What if you were given the task of designing a retirement system from scratch? In a recent paper, New York University law professor David Kamin proposes a retirement system that combines a mandatory savings floor with tax incentives to encourage savings above the mandated minimum. He is not the first to propose a new mandatory retirement plan, with others proposing that either employers be required to offer a plan or workers be required to contribute to a plan.

Exemptions from Investor Protections Put California Savers at Risk

By Paul Schott Stevens

March 22, 2017

The following ICI Viewpoints is a letter to the editor by Paul Schott Stevens, president and CEO of the Investment Company Institute, in response to an editorial published on March 8, 2017, in the Los Angeles Times.

For “401(k) Pioneers,” No Reason for Regrets

By Paul Schott Stevens

January 10, 2017

The following ICI Viewpoints is a letter to the Wall Street Journal by Paul Schott Stevens, president and CEO of the Investment Company Institute, in response to an article published on January 3, 2017.

Dear Editor:

It may be, as you report, that “401(k) Pioneers Lament What They Started” (Page A1, Jan. 3). But the facts are clear: America’s retirement system is stronger today, in the expanding 401(k) era, than it was when defined benefit pensions were the primary vehicle for retirement savings.

Ten Years After the PPA, the Path to Retirement Saving Is Easier

By Sarah Holden and Elena Barone Chism

August 22, 2016

Ten years ago, on August 17, 2006, President George W. Bush signed the Pension Protection Act (PPA) into law, with the goal of ensuring greater retirement security for American workers. With regard to defined contribution (DC) plans, such as 401(k) plans, PPA further encouraged automatic enrollment while paving the way for diversified default investments and the creation of Roth accounts inside DC plans. PPA also made permanent previously legislated contribution-limit increases and the saver’s credit.

Secure Choice Is Risky for Workers and for the State

By Paul Schott Stevens

August 17, 2016

Millions of Americans save for retirement using employer-sponsored plans that offer tax advantages and excellent investment options.

Building on the Success of the Private-Sector Retirement System Is the Real “Secure Choice”

By David Blass

July 8, 2016

Retirement assets in the United States totaled $24 trillion at the end of 2015, bolstered by investments through employer-sponsored plans and individual retirement accounts (IRAs).

How America Supports Retirement: The Incentive to Save Is Not Upside Down

By Peter J. Brady

February 25, 2016

In my new book, How America Supports Retirement: Challenging the Conventional Wisdom on Who Benefits, and the first three ICI Viewpoints in this series, I’ve demonstrated that Social Security’s benefit formula drives participation in tax-deferred employer-sponsored retirement plans ; that the full system of government support for retirement is progressive; and that those in higher tax brackets don’t enjoy greater “bang for their buck” from tax deferral.

How America Supports Retirement: What Do Tax Rates Have to Do with the Benefits of Tax Deferral? Less Than You Think

By Peter J. Brady

February 24, 2016

In my new book, How America Supports Retirement: Challenging the Conventional Wisdom on Who Benefits, I set out to gain a comprehensive view of how government policy supports American workers as they gather resources for retirement.

How America Supports Retirement: No, Benefits Are Not “Tilted” to the Higher Earners

By Peter J. Brady

February 23, 2016

Second in a series of ICI Viewpoints.

In my new book, How America Supports Retirement: Challenging the Conventional Wisdom on Who Benefits, I analyze the benefits individuals receive from the major government policies that help American workers accumulate resources for retirement: Social Security and tax deferral on compensation set aside for retirement in employer-based plans (both traditional pensions and defined contribution plans, such as 401(k) plans).

How America Supports Retirement: Tackling the Myths That Surround Us

By Peter J. Brady

February 22, 2016

America’s retirement system isn’t perfect but it’s a lot stronger than many people think. Whether by accident or design, the U.S. retirement system provides benefits to workers across the earnings distribution and has helped millions of retirees maintain their standard of living in retirement.

Retirement Planning: No Place for Fairy Tales

By Paul Schott Stevens

November 17, 2015

It is sadly appropriate that Labor Secretary Thomas Perez invokes fairy tales in his Nov. 16 commentary, “A path forward for state retirement plans.” Neither his version of the past nor his program for the future accord with reality.

Correcting a Distorted Picture of Retirement Resources

By Peter Brady

October 21, 2015

Can 401(k) plans and individual retirement accounts (IRAs) provide the income that retirees need to supplement Social Security and enjoy a secure retirement?

Small Savers at a Loss

By Brian Reid and Sarah Holden

September 25, 2015

As ICI has pointed out before, the proposed rule from the Department of Labor (DOL) to redefine what counts as a fiduciary relationship in the retirement market is fundamentally flawed. But it is no less flawed than the DOL’s justification for it—a Regulatory Impact Analysis that fails to demonstrate a market failure that supports the need for such a sweeping and costly rule.

Opinion: The Tax Threat to Your Mutual Fund

By Mike McNamee

May 7, 2015

Vanguard Chairman and CEO Bill McNabb sent “an open letter to all mutual fund investors” in the opinion pages of Thursday’s Wall Street Journal. His message: fund investors face a clear threat of higher costs, weaker returns, and a bailout tax to salvage other failing financial institutions—all if regulators get their way in imposing new rules on funds or their managers.

On Fiduciary Rule, New York Times Relies on Fatally Flawed Research

By Paul Schott Stevens

April 8, 2015

Today I submitted the following letter to the editor of the New York Times:

Getting the Numbers Right on Investment Advice for Retirement Savers

By Brian Reid

February 26, 2015

As the Wall Street Journal noted this morning, ICI has deep concerns about the data used in a White House memorandum to support the Department of Labor’s push for tighter standards for financial advisers who help investors in employer plans—such as 401(k)s—and individual retirement accounts (IRAs).

What’s Driving Retirement Plan Access?

By Peter Brady

October 17, 2014

Most workers who are likely to have the ability to save and who are focused primarily on saving for retirement have access to an employer-sponsored retirement plan—and nearly all of these workers choose to participate.

Statement of the Investment Company Institute at Senate Finance Committee Hearing on “Retirement Savings 2.0: Updating Savings Policy for the Modern Economy”

By Brian Reid

September 16, 2014

This statement was given on behalf of ICI by Brian Reid, chief economist, at the Senate Finance Committee’s hearing on “Retirement Savings 2.0: Updating Savings Policy for the Modern Economy.” For more information, see ICI’s full written testimony.

Happy Birthday ERISA! Congratulations on 40 Years

By Sarah Holden and Elena Barone Chism

September 2, 2014

Today marks the 40th birthday of the Employee Retirement Income Security Act (ERISA). Signed into law on September 2, 1974, ERISA introduced bold steps to safeguard Americans’ employer-sponsored pensions and created the individual retirement account (IRA). Assets earmarked for retirement totaled $0.4 trillion at year-end 1974 (see the figure below). At this modest start, private-sector defined benefit (DB) plans accounted for 35 percent of the total; federal, state, and local plans for 34 percent; private-sector defined contribution (DC) plans for 17 percent; annuities for 13 percent; and there was a mere glimmer of IRA assets by year-end. Currently, total U.S. retirement assets are $23.0 trillion, and their composition has shifted considerably over the past 40 years.

Unconventional Wisdom on Retirement Preparedness

By Peter Brady

August 4, 2014

How well are Americans planning and saving for retirement? This is an important question to answer—but also vexingly difficult.

Industry Leaders Address Evolving Industry Challenges and Opportunities

By Miriam Bridges

June 9, 2014

In conversations exploring outcome-oriented investing, the globalization of the fund industry, and the next generation of retirement plans, industry leaders offered their perspectives on serving investors in an evolving world during several insightful sessions at ICI’s annual General Membership Meeting, held in Washington May 20–22.

Now Off the Hill, Senator Snowe Still Brimming with Ideas, Advice

By Rob Elson

June 5, 2014

U.S. policy is ripe for reform in a number of key areas, but changes to ease the polarized political environment must come first, former U.S. senator Olympia Snowe (R-ME) told the crowd during the final session of ICI’s 56th annual General Membership Meeting (GMM), held May 20–22 in Washington, DC.

Industry Leaders Reflect on Serving Investors in an Evolving World

By Christina Kilroy

June 4, 2014

Speaking on the Leadership Panel held Wednesday, May 21, at ICI’s General Membership Meeting (GMM), fund industry leaders agreed that challenges as well as opportunities abound for their businesses in today’s complex world.

GMM Policy Forum: BlackRock’s Larry Fink Speaks with ICI’s Paul Stevens

By Todd Bernhardt

May 21, 2014

The fund industry needs to stop focusing on the moment and start focusing on outcomes when advising investors on their resources, said Laurence D. Fink, chairman and CEO of BlackRock, at ICI’s Annual Policy Forum, part of the Institute’s 56th General Membership Meeting (GMM).

Washington: Put Your (Retirement) Money Where Your Mouth Is

By Mike McNamee

March 4, 2014

When President Obama announced a new effort to expand access to retirement savings opportunities, ICI was among the first to applaud. The Administration’s “myRA” looks to provide a new option for Americans who want to put money aside for retirement, but who might not have access to a retirement plan through their workplace. These accounts would complement the wide array of investment options already available to these workers.

The Status of Global Retirement Savings: Taking Stock, Moving Forward

By Dan Waters

December 20, 2013

Around the world, as systems for building retirement resources come under increasing pressure, countries of every size and economic situation are facing long-term savings challenges. To meet these challenges, it is critical that pension industry experts, policymakers, and fund industry representatives learn from one another and share solutions that put the needs of savers first.

America’s Retirement System Is Strong

By Sarah Holden

December 18, 2013

One year ago, ICI released its landmark study, The Success of the U.S. Retirement System, a compilation of research from a wide range of sources, which found that the country’s retirement system is fostering economic security in retirement for Americans across all income levels.

By Paul Schott Stevens

September 4, 2013

The concerns of the Center for American Progress about the 401(k) system (covered August 20 in “A Better Way to Save for Retirement?”) are mistaken.

In Case You Missed It: “A Three-Step Approach to Global Retirement Challenges”

By Stephanie Ortbals-Tibbs

May 8, 2013

By David Abbey and Sarah Holden

April 12, 2013

The U.S. Department of Labor (DOL) is preparing to reintroduce its controversial proposal to revise the long-standing definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA).

In Case You Missed It: “On Retirement Policy, Don't Mess with Success”

By Ianthé Zabel

January 28, 2013

In an op-ed for InvestmentNews, ICI President and CEO Paul Schott Stevens explains the importance of preserving incentives that help Americans save for retirement.

Read more…

TOPICS: 401(k)Retirement Policy

401(k) Plans: Key in Helping Americans Achieve Secure Retirement

By Paul Schott Stevens

September 19, 2012

I submitted the following letter to the New York Times in response to a recent column on 401(k) plans:

August 23, 2011

401(k) Plans Help Keep Americans on Track

By Paul Schott Stevens

August 1, 2011

ICI sees strong evidence that the features of 401(k) plans help Americans avoid overreaction to financial turmoil, by countering extremes in investor behavior that hard times often produce.

This was one of the key points that I made recently at the Ayco Summer InnerCircle Benefits and Compensation Conference in Saratoga Springs, New York. I invite you to look over my full presentation, which contains a trove of data and charts pertinent to retirement policy.

Read more…

TOPICS: 401(k)Retirement Policy

The Comprehensive Regulatory Framework Around IRAs

By Mary S. Podesta and Elena B. Chism

July 28, 2011

November 29, 2010

In London today, at a hearing room of the House of Commons, I addressed The Henry Jackson Society, a nonpartisan think tank focused on human rights, constitutional democracy, and institutional reform.

Read more…

TOPICS: Retirement Policy