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Equity Ownership Rising, Study Shows

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Sept. 27, 2002 — Equity ownership in the U.S. has increased over the last three years, despite the bear market and terrorist attacks, a survey done for trade groups representing mutual fund and securities firms showed.

Nearly half of all domestic households, an estimated 52.7 million, were invested in stocks at the start of this year, an increase of 7.1% since January 1999, according to the study, which was conducted for the Investment Company Institute, a fund industry organization, and the Securities Industry Association.

Nearly half of all equity investors in January 2002 were found to have stock assets of less than $50,000, and only 7% owned $500,000 or more in stocks, nearly the same percentages as three years ago. More equity investors owned funds than individual securities. Overall, 89% of stock investors owned funds last January, while 49% held individual stocks.

In addition, 52% of stock investors only held stock funds, compared to 11% who owned individual stocks and 38% who owned a combination of funds and stocks. These patterns were similar to those revealed in a study of equity ownership done for the trade groups in 1999.

The latest survey also found that among typical investors, 33.7% owned mutual funds, individual stocks, or both, about the same percentage as those who owned those securities through employer-sponsored plans.

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More than half of the respondents (58%) said they tend to rely on advice from a professional financial adviser when buying or selling stocks.

Most investors indicated they have a long-term investment horizon and generally expected to recoup losses sustained during a market decline.

The study also found that more investors bought stocks and funds than sold them last year. Among stock fund owners, buyers outnumbered sellers by 22% to 16%, while 37% of investors in individual stocks bought shares, compared to 30% who sold.

Following the Sept. 11 terrorist attacks, nearly three-quarters of the investors surveyed indicated they didn’t plan to increase or decrease the percentage of household assets they hold in stocks. Another 17% expected to increase their stock ownership and 10% expected to decrease their stock investments.

Less than a quarter of investors bought or sold stocks between Sept. 17, 2001, when trading resumed after the attacks, and the end of the year, and the majority of these investors said their transactions were not directly tied to the attacks.