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1 in 5 Investors Can’t Name the Funds They Own: Report

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One in five consumers can’t name the investment products they own or the firms behind them, according to new Hearts & Wallets research.

A new report by Hearts & Wallets — Investment Products & Asset Managers: Building Product Relevancy Through Consumer Insights — analyzes consumer awareness and ownership of investment products along with awareness of asset allocation and asset managers.

The report does find that consumer ability to name the investment products they own is improving with a recent uptick in product awareness.

Eight in 10 consumers can name the products they own, with a 10-percentage-point increase over the past two years. For products, consumers were asked to identify ownership of cash, CDs, mutual funds, ETFs, individual stocks, bonds, annuities or other products.

However, the report notes that much of the uptick is driven by consumers with the least money, often with large cash holdings.

Consumers with less than $100,000 in investable assets increased product ownership awareness by 15 percentage points from 63% to 78% in the last two years as the awareness level for consumers with more than $100,000 remained nearly flat.

“Helping consumers become more aware of product ownership can give them more control of their financial future, and really, increase their overall financial literacy,” Laura Varas, CEO and founder of Hearts & Wallets, said in a statement. “Firms have a wonderful opportunity to stand out among commoditized offerings that are only differentiated on price. Consumers tell us that are really confused not only about products, but also about the firms that create them.”

Among consumers who own mutual funds or ETFs, four out of five can name at least one fund family that they are certain they own, while 1 in 5 can’t name any, according to the report.

On average, the report finds that many owners can name three fund families they are “definitely shareholders of” and five fund families that they “think they may be shareholders of but are unsure.”

To measure the ratio of shareholders who are definitely sure of ownership, Hearts & Wallets created a shareholder awareness score, which tracks consumer certainty by fund family.

Fidelity and Vanguard stand out for consumers who know the products they own and the firms who make them, and they received the highest Hearts & Wallets Shareholder Awareness Scores at 70%.

Over the past three years, Shareholder Awareness Scores improved most at Wells Fargo Funds, iShares (BlackRock), Vanguard, Fidelity and American Century.

According to Amber Katris, Hearts & Wallets subject matter expert and report author, “this measure provides a great snapshot of firms that have formed a strong bond with their shareholders.”

According to the report, “many well-respected asset managers” have shareholder awareness scores of less than a third. For many of these low-scoring asset managers, intermediaries handle sales.

“Some asset managers may have made a strategic decision to not spend money on direct communications with shareholders, and some firms may feel they can’t be responsible for general consumer confusion,” the report states.

For the report, Hearts & Wallets drew from the latest fielding of its Investor Quantitative Database, which has data on retail consumer attitudes, behaviors and buying patterns of more than 40,000 U.S. households.

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