Retirement Plans Boost Mutual Fund Ownership

The gap between mutual fund ownership outside of retirement plans and inside of retirement plans narrowed in 2006, a recent survey by the Investment Company Institute (ICI) revealed.

An estimated 54.9 million US households and 96 million individual investors own mutual funds, according to the report, with 38.3 million households owning mutual funds through their retirement plans. While the percentage of U.S. households owning funds has stayed about the same since 2003, a decade ago, an estimated 10.4 million more households owned funds outside employer plans than inside these plans. According to ICI, the growth of fund ownership through workplace retirement plans has been largely fueled by the shift from traditional pensions to defined contribution plans.

Most mutual fund shareholders have moderate household incomes and are in their peak earning
and saving years. About three in five U.S. households owning mutual funds have incomes between $25,000 and $99,999, and about two-thirds are headed by individuals between the ages of 35 and 64. The incidence of mutual fund ownership increases with household income, which explains why mutual fund owners generally have incomes higher than the national average, according to ICI. For instance, 70 percent of all U.S. households with incomes of $50,000 or more
own funds in 2006, compared with 26% of households with incomes less than $50,000.

At present 72% of shareholders age 65 or older have Internet access, up from 63% a year ago. In contrast, Internet access among shareholders age 35 or younger increased modestly, from 94% a year ago to 96% this year. An annual ICI survey of fund ownership and Internet usage reveals that nearly 55 million U.S. households own mutual funds and more than 70% of these households use the Internet at least once a day.

The full ICI report is online here