The U.S. Mutual Fund Martetplace

The Investment Company Institute ("ICI") is a national trade organization which promotes the public understanding of mutual funds and other investment companies.  Each spring they release the Investment Company Fact Book which provides an overview of the current investment company marketplace.  Complete with detailed information, this annual publication reports on a wide range of data on the funds industry, including retirement assets, characteristics of fund owners and other trends.  To give you an idea of the scope of investments made in these fund companies, and the role they play in the U.S. economy, I thought I would share with you some of the highlights.

To give you an idea of the size of the U.S. mutual fund marketplace, here are a few quick facts and figures taken from this year's edition.  U.S. registered investment companies managed $9.6 trillion in mutual funds at year end 2008, a $2.4 trillion decrease from 2007.  Worldwide mutual fund assets suffered decreases of $7.2 trillion, bringing the worldwide total down to $19 trillion.  On the upside, which helped reduce the overall losses, U.S. shareholders added $411 billion in new cash to mutual funds in 2008 and reinvested $214 billion of income dividends that mutual funds distributed during the year.  As you can see, these investments are very large and thus play a significant role in the U.S. market.  The U.S. has the world's largest mutual fund market accounting for 51% of the world's total net assets invested in mutual funds.  Investment companies as a whole were the largest group of investors in U.S. companies, holding 27% of their outstanding stock at the year-end 2008.

Who owns these funds? In 2008, an estimated 92 million investors owned mutual funds and held 82% of total mutual fund assets.  45% of all U.S. households owned funds.  Below are some additional characteristics of mutual fund investors:

Characteristics of Mutual Fund Investor
Median Age 49
Married or living with a partner 76%
Median Household Income $80,000
Median number of funds owned 4
Own equity funds 80%
Saving for Retirement 95%

The Investment Company Fact book lays out many more characteristics, each with their own detailed analysis.

As you can see in the chart above, the greatest use of mutual fund investing is for retirement purposes.  Judging by the incidence of Individual Retirement Account ("IRA") ownership among U.S. households, IRAs are an important component in American's retirement savings strategy.  Mutual fund assets held in IRAs were $1.6 trillion at year-end 2008.  Assets managed by mutual funds were the largest component of IRA assets, followed by securities held directly through brokerage accounts.  The mutual fund industry's share of the IRA market increased from 22% in 1990 to 44% by year-end 2008.

The ICI does a great job in providing information on Mutual Funds and other investment companies.  Their website,, is an excellent resource for information and literature on mutual funds and other investment companies.  Clearly written and reader friendly, the ICI offers information for all levels of investors.

John Sandvik is a partner with First Associated Investment Advisors, Inc. ("FAIA"), with offices in Wauwatosa and Duluth, MN.  For questions or additional information, please contact John at

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