February 10, 2003

Most Fund Holders In For Long Haul: ICI

The vast majority of mutual fund shareholders have a long-term investment horizon, according to a survey by the ICI.

In a report, the trade group stated that 97% of fund shareholders regard their mutual fund investments as long-term and 72% identify retirement as their `primary financial goal.' In addition, more than 80% indicate they are not `overly concerned with short-term market fluctuations.'

The ICI further noted that retirement investors continued to keep a long-term investment horizon despite adverse market conditions. ICI cited that in 2001, net new cash flow to mutual funds from retirement accounts was an estimated $140 billion, up 18% from the year 2000. The net flow was the third largest on record, and the increase in flows occurred in both IRAs and defined contribution plans.

The research also found that retirement account net flows were positive for all types of mutual funds.

The ICI also said the average total shareholder cost of mutual funds continues to decline. The total cost of investing in equity mutual funds decreased about 5% between 1998 and 2001, bringing the cumulative decrease since 1980 to 43%. ICI explained that this decline in total shareholder cost in equity funds "largely reflected a continuation of the downward trend in distribution costs, which is the component of total cost that primarily represents compensation to sales professionals for advice and service."

The cost of investing in bond and money market funds also continued to fall -- by 17% and 14%, respectively between 1998 and 2001, and by 41% and 35%, respectively since 1980.

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