Mutual funds remain the most popular investment vehicle among U.S. households.
According to the latest Annual Mutual Fund Shareholder Tracking Survey from the Investment Company Institute, just over 56 million households, or 45% of all U.S. households, owned mutual funds in mid-July. By comparison, 7.8 million households owned ETFs and 3.6 million owned closed-end funds, but roughly 80% of ETF and closed-end fund shareholders also owned mutual funds.
“Mutual funds are an important component of investor portfolios,” said Sarah Holden, senior director of retirement and investor research, in a statement. “Shareholders choose funds to help them reach a variety of financial goals, including saving for retirement, education, a home, or for an emergency.”
Among mutual fund owners, fund assets account for more than half their household financial assets.
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Most of those households (81%) purchased funds through employer-sponsored retirement plans, but 64% also own shares outside those plans and 45% owned funds both inside and outside retirement plans, according to the ICI.
The survey by the mutual fund industry trade association does not explain the popularity of mutual funds in retirement plans over ETFs, but a primary reason is the fact that ETFs are sold as whole shares while investors usually buy fractional mutual fund shares in retirement plans, which can more easily handle random-dollar regular contributions. Mutual funds have approximately $18 trillion in assets versus $3 trillion held by ETFs.