For more stories like this, sign up for the PLANADVISERdash daily newsletter.
The Markets February 27, 2009
Retirement a Top Priority for Investors
Almost three-fourths of mutual fund investors hold funds outside of an employer-sponsored plan, and most of those mutual funds were purchased through an adviser.
Reported by Rebecca Moore
A report from the Investment Company Institute (ICI) found that in 2008, 68% of mutual fund-owning households owned funds through employer-sponsored retirement plans, and 73% owned funds outside of such plans. Forty-one percent of fund-owning households held funds both inside and outside of employer-sponsored retirement plans.
Among households owning mutual funds outside of employer-sponsored retirement plans, 77% owned funds purchased from a professional financial adviser, according to a release from ICI.
Employer-sponsored retirement seem to be the avenue for starting to invest in mutual funds, as ICI found 68% of households who purchased their first fund in 2000 or later purchased that fund through such a plan, and 53% of households that made their first purchase before 1990 did so through an employer-sponsored plan.
Equity funds were the most commonly owned type of mutual fund, held by 80% of mutual fund-owning households. Thirty-eight percent owned hybrid funds, 48% owned bond funds, and 66% owned money market funds.
Characteristics of Investors
Saving for retirement is a financial goal in 95% of households that own mutual funds, and the number one goal for 76% of fund-owning households, according to ICI’s data.
Most households owning mutual funds were headed by individuals in their peak earning and saving years. About two-thirds of such households were headed by persons between the ages of 35 and 64. In addition, ICI said, most fund owners were employed and had moderate household incomes.
Analysis of fund ownership by generation shows that 46% of households owning mutual funds were headed by members of the Baby Boomer generation (born between 1946 and 1964). In addition to being the largest shareholder group, Baby-Boomer households owned the largest share of households’ total mutual fund assets (56%). Thirty-six percent of households owning mutual funds were headed by members of Generation X and Generation Y (born in 1965 or later), and 18% were headed by members of the Silent and GI Generations (born in 1945 or earlier).
Profile of Mutual Fund Shareholders, 2008, is available here.