Individual Retirement Accounts (IRAs) and employer-sponsored defined contribution plans gained ground in 2005, according to the Investment Company Institute's (ICI) 2006 Fact Book.
Investors held $7.3 trillion in IRAs and defined contribution plans at year-end 2005, according to the ICI, accounting for more than half of the entire retirement market.
"Today's workers face a range of potential challenges as they move toward retirement. But the data indicate that they are also building up their retirement savings and that mutual funds are a key vehicle through which households have accumulated and are accumulating wealth," said Brian Reid, ICI chief economist.
The Factbook also reported, among other things, that investors are increasingly turning toward hybrid funds-lifestyle or lifecycle funds-designed to meet their risk preferences. In 2005, assets held in lifestyle funds grew by 67%, while lifecycle fund assets grew by 59%.
The popularity of exchange-traded funds also grew rapidly in 2005, by 31% to $296 billion by year-end, while closed-end funds maintained their share of the investment market, rising 9% to $276 billion, according to the Factbook.