Survey Finds Increase in Mutual Funds Investments
The number of U.S. households holding mutual funds has continued to rise, despite--or perhaps because of--the steepest decline in stocks since 1974, a new industry survey shows.
About 52% of households owned mutual funds as of May, up from 49% in the same period a year earlier, the Investment Company Institute, the trade association for the fund industry, said Monday.
The gain may reflect many investors’ hunt for diversification, such as by adding bond funds or money market funds to their portfolios, as stock prices have tumbled since spring 2000, analysts said.
The ICI estimates that 93.3 million individuals owned mutual funds as of May, up from 87.9 million in May 2000.
Almost nine of 10 households that own funds have stock funds among their holdings, the survey showed.
On average, equity funds account for 65% of an investor’s fund portfolio.
Fifty-seven percent of fund investors bought their first fund through defined-contribution retirement programs, such as 401(k) plans, the survey said. Thirty-one percent own funds only through those plans.
The typical decision maker in households that own mutual funds is 46, married and college-educated with an income of $62,100.
The typical household has $40,000 total in funds.
Almost half of fund shareholders, or 47%, invested in their first fund prior to 1990, the survey said.
Fourteen percent made their first fund investment in 1998 or thereafter.
Retirement remains the primary investing goal of fund investors: Nearly three-quarters of fund owners said they are investing for retirement.
That could explain why redemptions from stock funds have been relatively minor over the last 18 months, despite the deep bear market: Most investors continue to insist they will hang on for the long haul.
Other highlights from the survey:
* The median number of funds owned by households is four.
* 69% of fund owners said they tend to rely on the advice of a professional financial advisor when making fund investment decisions.
* 83% of fund investors said they are not overly concerned with short-term market fluctuations.
For the survey, about 3,000 financial decision makers in households owning funds were interviewed during May and June, ICI said.
