INVESTMENT
COMPANY
FACT BOOK
A Review of Trends and
Activities in the Investment
Company Industry
www.icifactbook.org
Tot wordwide ssets invested in reguted open-end funds:
*
$. triion
United Sttes Europe Asi-Pcific Rest of the word
$33.6 triion $2.5 triion $9.7 triion $4.0 triion
US-registered investment compn tot net ssets: $. triion
Mutu
funds
Exchnge-trded
funds
Trdition
cosed-end funds
Unit investment
trusts
$25.5 triion
$8. triion $249 biion $77 biion
US-registered investment compnies’ shre of:
US corporte
equit
US nd foreign
corporte bonds
US Tresur nd
government genc
securities
US municip
securities
Commerci
pper
33% 22% 5% 27% 22%
US househod ownership of US-registered funds
Number of
househods
owning funds
Number of
individus
owning funds
Percentge of
househods
owning funds
Medin mutu fund
ssets of mutu
fund–owning househods
Medin number
of mutu funds
owned
7.5 miion 20.8 miion 54.4% $25,000 3
US retirement mrket
Tot retirement
mrket ssets
Percentge of househods with
tx-dvntged retirement svings
DC pn nd IRA ssets
invested in mutu funds
$38.4 triion 74% $.9 triion
* Reguted open-end funds incude mutu funds, exchnge-trded funds (ETFs), nd institution funds.
2023 Facts at a Glance
INVESTMENT
COMPANY
FACT BOOK
A Review of Trends and
Activities in the Investment
Company Industry
www.icifactbook.org
The Investment Compn Institute (ICI) is the eding ssocition representing reguted investment funds. ICI’s mission is to strengthen
the foundtion of the sset mngement industr for the utimte benefit of the ong-term individu investor. Its members incude
mutu funds, exchnge-trded funds (ETFs), cosed-end funds, nd unit investment trusts (UITs) in the United Sttes, nd UCITS nd
simir funds oered to investors in other jurisdictions. ICI so represents its members in their cpcit s investment dvisers to certin
coective investment trusts (CITs) nd reti seprte mnged ccounts (SMAs). ICI hs oces in Wshington DC, Brusses, nd
London nd crries out its interntion work through ICI Gob.
Sixt-fourth edition
ISBN ---
Copright ©  b the Investment Compn Institute. A rights reserved.
INVESTMENT
COMPANY
FACT BOOK
A Review of Trends and
Activities in the Investment
Company Industry
www.icifactbook.org
CONTENTS
Letter from the Chief Economist
ICI Senior Research Sta and Acknowledgments
 CHAPTER 
Worldwide Regulated Open-End Funds
 CHAPTER 
US-Registered Investment Companies
 CHAPTER 
US Mutual Funds
 CHAPTER 
US Exchange-Traded Funds
 CHAPTER 
US Closed-End Funds
 CHAPTER 
US Fund Expenses and Fees
 CHAPTER 
Characteristics of US Mutual Fund Owners
 CHAPTER 
US Retirement and Education Savings
 APPENDIX A
How US-Registered Investment Companies Operate and
the Core Principles Underlying Their Regulation
 APPENDIX B
Significant Events in Fund History
 INVESTMENT COMPANY FACT BOOK
iv
Letter from the
Chief Economist
I m deighted to present the th edition of the Investment Company Fact Book. This er is
prticur significnt s we ceebrte two miestones in the histor of our industr—the th
nniversr of the mutu fund nd the th nniversr of the individu retirement ccount (IRA).
Mutu funds hve ped  pivot roe in democrtizing investing, mking it possibe for
miion Americns to prticipte in finnci mrkets nd chieve their finnci gos. The
growth nd evoution of mutu funds over the pst centur is  testment to their enduring
ppe nd the trust investors pce in them. Tht sting power, pus new product innovtions
cross the investment compn industr, hs positioned funds to p  eding roe in Americ’s
success over the next  ers.
Menwhie, IRAs, ong with (k) pns, hve become  cornerstone of retirement svings in
the United Sttes. These vehices oer individus tx-dvntged ws to sve for retirement,
nd their importnce continues to grow s the retirement ndscpe evoves.
The Fact Book remins n essenti resource for understnding these nd other deveopments in
the industr. As ws, it provides comprehensive, dt-driven insights into the industr’s trends
nd ctivities. This er’s edition, ike those before it, ims to inform nd educte, fostering 
deeper understnding of the industr nd its roe in heping investors buid nd preserve weth.
As we reect on these miestones nd ook to the future, we remin committed to serving
investors nd the industr. We hope ou wi find this er’s Fact Book vube nd s insightfu
s ever bout funds nd the investors who re on them.
Best regrds,
Sen Coins
Chief Economist
1
LETTER FROM THE CHIEF ECONOMIST
ICI Senior Research Sta
Chief Economist
Sen Coins eds the Institute’s Reserch Deprtment. He oversees
sttistic coections nd reserch on US nd gob funds, finnci
mrkets, the US retirement mrket, finnci stbiit, nd investor
demogrphics. Before joining ICI in , Coins worked t the US
Feder Reserve Bord of Governors nd the Reserve Bnk of New
Zend. He hs  PhD in economics from the Universit of Ciforni,
Snt Brbr, nd  BA in economics from Cremont McKenn
Coege.
Deput Chief Economist
Rochee (She) Antoniewicz eds the Institute’s reserch eorts
on the structure nd trends of the exchnge-trded fund nd mutu
fund industries, s we s on finnci mrkets in the United Sttes
nd gob. Before joining ICI in , Antoniewicz spent  ers
t the Feder Reserve Bord of Governors. She erned  BA in
mngement science from the Universit of Ciforni, Sn Diego,
nd n MS nd PhD in economics from the Universit ofWisconsin–
Mdison.
Senior Director of Retirement nd Investor Reserch
Srh Hoden eds the Institute’s reserch eorts on retirement nd
tx poic, s we s investor demogrphics nd behvior. Hoden,
who joined ICI in , heds eorts to trck trends in househod
retirement sving ctivit nd ownership of funds, s we s other
investments inside nd outside retirement ccounts. Before joining
ICI, Hoden served s n economist t the Feder Reserve Bord
of Governors. She hs  PhD in economics from the Universit
ofMichign nd  BA in mthemtics nd economics from Smith
Coege.
 INVESTMENT COMPANY FACT BOOK
2
3
ICI SENIOR RESEARCH STAFF
Senior Director of Sttistic Reserch
Jud Steenstr oversees the coection nd pubiction of week,
month, qurter, nd nnu dt on open-end mutu funds, s we
s dt on cosed-end funds, exchnge-trded funds, unit investment
trusts, nd the wordwide fund industr. Steenstr joined ICI in  nd
ws ppointed director of sttistic reserch in . She hs  BS in
mrketing from ThePennsvni Stte Universit.
Acknowedgments
Pubiction of the 2024 Investment Company Fact Book ws directed b Jmes Duv, economist,
nd Jud Steenstr, senior director of sttistic reserch, working with Dvid Crfied, writer/editor,
nd Jnet Zvistovich, senior director of cretive. Contributors from ICI’s Reserch Deprtment who
deveoped nd edited nsis, text, nd dt re Irin Atmnchuk, Steven Bss, Miche Bogdn,
Aex Johnson, Shei McDond, Hmmd Qureshi, Doug Richrdson, Cse Rbk, Dn Schrss, nd
Shne Worner.
2023 ICI Research and
Statistical Publications
ICI is the primr source of nsis nd sttistic informtion on the investment compn industr. In
ddition to the nnuInvestment Company Fact Book, the Institute’s Reserch Deprtment reesed
more thn  ppers,ICI Viewpointsposts, nd sttistic reports in .
TheInvestment Company Fact Bookremins one of ICI Reserch’s most visibe products. In its
thedition, this ICI pubiction continues to provide the pubic nd poicmkers with  comprehensive
summr of ICI’s dt nd nsis.
Ppers
Industr nd Finnci Ansis
■
Accounting for International Exposure in Mutual Fund Performance Evaluation: Evidence from
Target Date Funds, December 
■
Summary of Recent ICI Research on First-Mover Advantage, Dilution, and Systemic Risk in
Open-End Funds, December 
■
“Ongoing Charges for UCITS in the European Union,2022,” ICI Research Perspective,
October
■
“The Closed-End Fund Market, 2022,”ICI Research Perspective, M 
■
“Trends in the Expenses and Fees of Funds, 2022,”ICI Research Perspective, Mrch 
■
First-Mover Advantage Among Direct Investors Holding Overlapping Positions and its
Implications for Mutual Funds, Mrch 
Retirement nd Investor Reserch
■
“Profile of Mutual Fund Shareholders, 2023,” ICI Research Report, December 
■
“Characteristics of Mutual Fund Investors, 2023,” ICI Research Perspective, October 
■
“Ownership of Mutual Funds and Shareholder Sentiment, 2023,” ICI Research Perspective,
October
■
“Changes in 401(k) Plan Asset Allocation Among Consistent Participants, 2016–2020,”
ICIResearch Perspective, October 
■
Ten Important Facts About 401(k) Plans, October 
 INVESTMENT COMPANY FACT BOOK
4
5
 ICI RESEARCH AND STATISTICAL PUBLICATIONS
■
“How 401(k) Plan Participants Use Loans over Time: An Analysis of Loan Activity of Consistent
401(k) Plan Participants, 2016–2020,” ICI Research Perspective, September 
■
Profile of ETF-Owning Households, 2022, August 
■
“Defined Contribution Plan Participants’ Activities, First Quarter 2023,” ICI Research Report,Ju

■
When I’m 64 (or Thereabouts): Changes in Income from Middle Age to Old Age, M 
■
The BrightScope/ICI Defined Contribution Plan Profile: A Close Look at ERISA 403(b) Plans, 2019,
Apri 
■
“What US Households Consider When They Select Mutual Funds, 2022,” ICI Research Perspective,
Apri 
■
“What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account
Balances, 2016–2020,” ICI Research Perspective, Mrch 
■
“Defined Contribution Plan Participants’ Activities, 2022,” ICI Research Report, Mrch 
■
“The Role of IRAs in US Households’ Saving for Retirement, 2022,” ICI Research Perspective,
Februr 
■
“American Views on Defined Contribution Plan Saving, 2022,” ICI Research Report, Jnur 
ICI’s ppers with suppement dt tbes contining ddition dt re vibe twww.ici.org/
research.
Ansis nd Commentr: ICI Viewpoints
In ddition to reserch ppers, ICI stff produce nsis nd commentr for the Institute’s
bog,ICIViewpoints. Beow re some exmpes of recent nsis b ICI stff. Pese visit
www.ici.org/viewpointsto find these nd more.
■
Savers Remain Focused on Retirement Goals Through Market Turbulence
■
Falling Fund Fees Continue to Benefit America’s Investors
■
See our fund fees fct sheet:
Five Important Points on Mutual Fund Fees and Expenses
■
Three Myths and Facts About Bank Deposits, Bank Lending, and Money Market Funds
■
Shareholder Activism Threatens Closed-End Funds and Their Investors
■
Setting the Record Straight on Dilution, First-Mover Advantage, and Financial Stability Risk
■
See ICI’s comment letter to the SEC on its proposed Open-End Fund Liquidit Risk Mngement
Progrms nd Swing Pricing; Form N-PORT Reporting.
■
See ICI Global’s comment letter to IOSCO on Liquidit Mngement Too Guidnce.
■
See ICI Global’s comment letter to the FSB on Proposed Revisions to the FSB’s  Poic
Recommendtions.
■
Aso, see our Annotated Bibliography of Research on Open-Ended Fund Liquidity Dynamics.
■
First-Mover Advantage: The Theory Is Only as Good as Its Assumptions
 INVESTMENT COMPANY FACT BOOK
6
■
A ook t the EU’s Reti Investment Strteg, ICI Viewpoints series
■
Cost Benchmarks in the EU’s Retail Investment Strategy Will Stie Innovation
■
Cross-Border Frictions Within EU Capital Markets Can Drive Up Costs
■
Comparing Apples and Pears: EU UCITS and US Mutual Funds
■
The US Retirement System Is Working
■
How Do ETF and Mutual Fund Investors Dier?
■
Proxy Advisory Firms—Killing Closed-End Funds Softly with Their Policies
■
See our fct sheet highighting the ctivist presence in isted cosed-end funds:
Closed-End Fund Activism
■
The SEC Is Kicking Bank Loan Funds to the Curb
■
See ICI’s comment letter to the SEC on how the SEC’s proposed mendments to the iquidit risk
mngement rue woud ect mutu funds nd ETFs investing in bnk ons.
■
The SEC’s Liquidity Proposal Is Arbitrary and Harmful to Investors
■
See our fct sheet highighting mutu funds’ success in mnging iquidit:
Liquidity Management: A Mutual Fund Success Story
Sttistic Reeses
Trends in Mutu Fund Investing
Month report tht incudes mutu fund ses, redemptions, ssets, csh positions, exchnge ctivit,
nd portfoio trnsctions for the period b  investment objectives.
Estimted Long-Term Mutu Fund Fows
Week report tht provides ggregte estimtes of net new csh ows to  ctegories of equit, hbrid,
nd bond mutu funds.
Estimted Exchnge-Trded Fund (ETF) Net Issunce
Week report tht provides ggregte estimtes of net issunce to six ctegories of ETFs.
Combined Estimted Long-Term Mutu Fund Fows nd ETF Net Issunce
Week news reese nd report tht provides ggregte estimtes of net new csh ows nd net
issunce to six ctegories of ong-term mutu funds nd ETFs.
7
 ICI RESEARCH AND STATISTICAL PUBLICATIONS
Mone Mrket Fund Assets
Week report on mone mrket fund ssets b tpe of fund.
Month Txbe Mone Mrket Fund Portfoio Dt
Month report bsed on dt contined in SEC Form N-MFP tht provides insights into the ggregted
hodings of prime nd government mone mrket funds nd the nture nd mturit of securit hodings
nd repurchse greements.
Retirement Mrket Dt
Qurter report tht incudes individu retirement ccount (IRA) nd defined contribution (DC) pn
ssets, mutu fund ssets inside retirement ccounts, nd estimtes of mutu fund net new csh ows to
retirement ccounts b tpe of fund.
Mutu Fund Distributions
Qurter report tht incudes pid nd reinvested cpit gins nd pid nd reinvested income dividends
of mutu funds b brod investment cssifiction.
Institution Mutu Fund Shrehoder Dt
Annu report tht incudes mutu fund sset informtion for vrious tpes of institution shrehoders,
broken out b brod investment cssifiction.
Cosed-End Fund Dt
Qurter report tht incudes cosed-end fund ssets, number of funds, issunce, redemptions,
distributions, use of everge, nd number of shrehoders b investment objective.
Exchnge-Trded Fund Dt
Month report tht incudes ssets, number of funds, issunce, nd redemptions of ETFs b investment
objective.
Unit Investment Trust Dt
Month report tht incudes the vue nd number of new trust deposits b tpe nd mturit.
Wordwide Reguted Open-End Fund Dt
Qurter report tht incudes ssets, number of funds, nd net ses b brod investment cssifiction of
funds in  jurisdictions wordwide.
These nd other ICI sttistics re vibe twww.ici.org/research/stats. To subscribe to ICI’s sttistic
reeses, visitwww.ici.org/pdf/stats_subs_order.pdf.
 INVESTMENT COMPANY FACT BOOK
8
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Data Tables
The sttistic dt tbes for the 2024 Investment Company Fact Book re vibe onine s Exce fies.
The dt tbes contin historic informtion on US mutu funds, exchnge-trded funds, cosed-end
funds, nd unit investment trusts, s we s informtion on wordwide reguted open-end funds.
SECTION ONE
US Mutual Fund Totals
SECTION TWO
US Closed-End Funds, Exchange-Traded Funds, and Unit Investment Trusts
SECTION THREE
US Long-Term Mutual Funds
SECTION FOUR
US Money Market Funds
SECTION FIVE
Additional Categories of US Mutual Funds
SECTION SIX
Institutional Investors in the US Mutual Fund Industry
SECTION SEVEN
Retirement Account Investing in US Mutual Funds
SECTION EIGHT
US-Registered Investment Companies
SECTION NINE
Worldwide Regulated Open-End Fund Totals
 Fct Book Dt Tbes
www.icifactbook.org/24--data-tables.html
9
METHODS AND ASSUMPTIONS
Methods and Assumptions
The foowing methods, uness otherwise specified, pp to  dt in this book:
■
Dt for US-registered investment compnies on incude those tht report sttistic informtion
to the Investment Compn Institute. Assets of these compnies re t est percent of industr
ssets.
■
Funds of funds re excuded from the dt to void doube counting.
■
Dors nd percentges m not dd to the tots presented becuse of rounding.
■
Dt for US-registered investment compnies incude exchnge-trded funds tht re not registered
under the Investment Compn Act of .
■
Long-term funds incude equit funds, hbrid funds, nd bond funds.
Dt re subject to revision. Athough informtion nd dt provided b independent sources re beieved
to be reibe, the Investment Compn Institute is not responsibe for their ccurc, competeness, or
timeiness. Opinions expressed b independent sources re not necessri those of the Institute. If ou
hve questions or comments bout this mteri, pese contct the source direct.
CHAPTER
Worldwide Regulated
Open-End Funds
Investors round the word hve historic demonstrted strong demnd for
reguted open-end funds (referred to in this chpter s reguted funds). In the
pst decde, wordwide net ses of reguted funds hve toted $.triion,
nd fund providers hve expnded the vst rr of choices, oering
investors ner , reguted funds. Demnd for reguted funds
strengthened considerb in  s mcroeconomic uncertint
receded, which contributed to positive net ses nd  percent
increse in tot net ssets. B er-end , reguted funds mnged
$.triion in tot net ssets wordwide.
IN THIS CHAPTER
 Wht Are Reguted Funds?
 Wordwide Tot Net Assets of Reguted Funds
 Size of Wordwide Reguted Funds in Gob Cpit Mrkets
CHAPTER 
 INVESTMENT COMPANY FACT BOOK
10
1
11
WORLDWIDE REGULATED OPENEND FUNDS
Wht Are Reguted Funds?
The Interntion Investment Funds Assocition (IIFA) defines reguted funds s coective investment
poos tht re substntive reguted, open-end investment funds.* Open-end funds re gener defined
s those tht issue new fund shres (or units) nd redeem existing shres (or units) on demnd. Such
funds re tpic reguted with respect to discosure, the form of orgniztion (for exmpe, s either
corportions or trusts), custod of fund ssets, minimum cpit, vution of fund ssets, nd restrictions
on fund investments (such s imits on everge, tpes of eigibe investments, nd diversifiction of
portfoio investments).
In the United Sttes, however, reguted funds incude not on open-end funds, consisting of mutu
funds nd exchnge-trded funds (ETFs), but so unit investment trusts nd cosed-end funds.
†
In Europe,
reguted funds incude Undertkings for Coective Investment in Trnsferbe Securities (UCITS)—ETFs,
mone mrket funds, nd other ctegories of simir reguted funds—nd terntive investment funds,
common known s AIFs.
In mn countries, reguted funds m so incude institution funds, which re restricted to being sod
to  imited number of non-reti investors; funds tht oer gurntees or protection of princip vi 
eg binding gurntee of income or cpit; nd open-end re estte funds investing direct in re
estte to  substntive degree.
At er-end , fund providers gob oered , reguted funds (Figure.). Europe hd the
rgest number of reguted funds with percent of the tot, whie equit funds were the most numerous
tpes of reguted funds (percent), foowed b bnced/mixed funds (percent), which so hod
equities in their portfoios.
* The primr dt source for wordwide reguted funds is the IIFA. In , the IIFA coected dt on wordwide reguted
funds from  jurisdictions. For informtion on individu jurisdictions, see the sttistic dt tbesvibe onine t
www.icifactbook.org/24--data-tables.html. For more detis bout the IIFA dt coection, see Wordwide Definitions of
Terms nd Cssifictions t www.ici.org/info/ww_q3_18_definitions.xls.
† Dt for unit investment trusts nd cosed-end funds re not incuded in this chpter; these funds re discussed in chpter 
nd chpter , respective.
 INVESTMENT COMPANY FACT BOOK
12
FIGURE
1.1
Number of Wordwide Reguted Open-End Funds
Percentage of funds by region or type of fund, year-end 2023
Type of fundRegion
Number of worldwide regulated open-end funds: 139,982
29
43
7
21
23
17
25
33
2
Asia-Pacific
Europe
United States
Rest of the world
Money market
Other*
Balanced/Mixed
Equity
Bond
* Other funds incude gurnteed/protected funds, re estte funds, nd other funds.
Note: Reguted open-end funds incude mutu funds, ETFs, nd institution funds.
Source: Interntion Investment Funds Assocition
Wordwide Tot Net Assets of Reguted Funds
Wordwide tot net ssets of reguted funds prti rebounded in  fter  shrp decine in the
previous er (Figure.).* A conuence of mcroeconomic nd geopoitic fctors ected wordwide
cpit mrkets in , eding to  notbe increse in the vue of the undering stocks nd bonds hed
b reguted funds. Among the fctors boosting finnci mrkets in :
■
intion esed fster thn expected in mn regions;
■
snchronized centr bnk poices heped curb intion expecttions nd provided some stbiit to
the gob finnci sstem; nd
■
better thn expected mcroeconomic conditions, despite gob geopoitic risks from Russi’s
ongoing invsion of Ukrine, the Isre–Hms wr, tensions between the United Sttes nd Chin
over Tiwn, nd interntion trde disruptions becuse of shipping ttcks in the RedSe.
* In this chpter, uness otherwise noted, dt for tot net ssets nd net ses re denominted in US dors.
13
WORLDWIDE REGULATED OPENEND FUNDS
FIGURE
1.2
Tot Net Assets of Wordwide Reguted Open-End Funds Incresed to $. Triion
in 
Trillions of US dollars by type of fund, year-end
20232022202120192017
2
20152013
16.3
15.5
8.0
8.0
3.5
3.3
5.2
4.9
31.8
12.9
10.4
38.2
36.4
60.1
15%
19%
11%
46%
Money market
Bond
Other
1
Balanced/Mixed
Equity
Total number of worldwide regulated open-end funds
106,06097,371113,223122,571137,846139,982131,815
49.3
54.7
70.9
68.9
4.7
5.2
21.8
10.4
4.8
5.9
6.4
24.5
11.8
4.8
6.9
6.7
8.6
6.1
8.8
13.7
33.6
7.0
5.8
8.8
11.5
27.0
7.3
6.4
9%
Other funds incude gurnteed/protected funds, re estte funds, nd other funds.
Dt for Russi re for :Q.
Note: Reguted open-end funds incude mutu funds, ETFs, nd institution funds.
Source: Interntion Investment Funds Assocition
With stock mrkets rising cross the gobe in  (percent in the United Sttes, percent in Europe,
nd percent in the Asi-Pcific region*) wordwide tot net ssets of equit funds, which invest
primri in pubic trded stocks, incresed b percent to $.triion t er-end . Bond
funds—which invest primri in fixed-income securities—sw their tot net ssets increse percent
over the sme period, somewht reecting tot returns (cpit gins nd interest income) on bonds in
Europe nd the Asi-Pcific region of percent nd percent, respective.† Net ssets of mone mrket
funds, which re reguted funds restricted to hoding short-term, high-quit debt instruments, so
incresed substnti.
* As mesured b the Wishire  Tot Mrket Index, the MSCI Di Tot Return Gross Europe Index, nd the MSCI Di Tot
Return Gross AC Asi-Pcific Index, which re  expressed in US dors.
† As mesured b the ICE BofA Pn-Europe Brod Mrket Index (expressed in euros) nd the Boomberg Asin-Pcific Aggregte
Tot Return Index (expressed in Jpnese en), which both cover investment grde securities.
 INVESTMENT COMPANY FACT BOOK
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Tot net ssets of wordwide reguted funds so vried wide b geogrphic region (Figure.). At
er-end , the mjorit of wordwide tot net ssets in reguted funds continued to be hed in the
United Sttes (percent) nd Europe (percent). Strong regutor frmeworks in both jurisdictions
hve contributed to their success. In recent decdes, US-reguted funds hve been bostered b their
vibiit s investment options in tx-dvntged ccounts, such s (k) pns. Menwhie, the
UCITSfrmework hs mn provisions tht ow for the pooing of ssets. These incude pssporting
(i.e., UCITS estbished in one countr cn be sod cross-border into one or more other Europen
countries), the vibiit of UCITS in countries outside of Europe, nd owing dierent shre csses to
be denominted in  rnge of dierent currencies or dpted to dierent tx structures.
Reguted funds in the Asi-Pcific region hed nother percent of wordwide tot net ssets. Given the
size of the popution, the rpid incresing economic deveopment nd weth in mn countries, nd
eorts to promote individu ccount-bsed sving nd investing, the region’s reguted fund mrket hs
potenti for continued growth.
Wordwide Reguted Open-End Fund Assets nd Fows
www.ici.org/reserch/stts/wordwide
FIGURE
1.3
The United Sttes Hs the Lrgest Shre of Tot Net Assets of Wordwide Reguted
Open-End Funds
Trillions of US dollars by region, year-end
20232022202120192017*20152013
2.02.3
13.7
13.6
4.8
3.8
3.4
9.1
38.2
36.4
70.9
14%
31%
49%
6%
Asia-Pacific
Europe
United States
Rest of the world
49.3
54.7
68.9
60.1
16.7 17.7
2.9
17.7
6.5
22.1
3.1
18.7
7.2
25.7
33.6
9.7
21.5
4.0
34.1
10.0
23.2
3.6
28.6
19.1
* Dt for Russi re for :Q.
Note: Reguted open-end funds incude mutu funds, ETFs, nd institution funds.
Source: Interntion Investment Funds Assocition
15
WORLDWIDE REGULATED OPENEND FUNDS
Wordwide Net Ses of Reguted Long-Term Funds
Wordwide demnd for reguted ong-term funds (equit, bond, bnced/mixed, nd other) incresed
shrp in , from net redemptions of $biion in  to net ses of $biion in 
(Figure.). The return to net inows for ong-term funds ws driven b the United Sttes nd Europe,
which hd net inows of $biion nd $biion, respective. Demnd so remined strong in the
Asi-Pcific region in  ($biion), which ws driven b net inows in Chin nd Jpn.
FIGURE
1.4
Wordwide Net Ses of Reguted Open-End Long-Term Funds Incresed in 
Billions of US dollars by region, annual
0
-500
500
1,000
1,500
2,000
2,500
3,000
3,500
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total worldwide net sales
Asia-Pacific
Europe
United States
Rest of the world
,
,
,
,

,
,338
,
- 

Note: Reguted open-end funds incude mutu funds, ETFs, nd institution funds. Long-term funds incude equit funds, bnced/
mixed funds, bond funds, nd other funds (gurnteed/protected, re estte, nd other funds), but excude mone mrket funds.
Source: Interntion Investment Funds Assocition
 INVESTMENT COMPANY FACT BOOK
16
Wordwide net ses of reguted ong-term funds incresed cross most fund ctegories in  when
compred with . For exmpe, wordwide net ses of equit funds incresed from net outows of
$biion in  to net inows of $biion in  (Figure.). The increse in net ses ws ike
ssocited with the gener improvement in gob equit mrkets, s net ows to equit funds hve
historic been reted to word equit returns.
Bond funds so experienced  mjor shift in net ses, going from net outows of $biion in 
to net inows of $biion in  (Figure.). This revers ws primri driven b continuing
deveopments round intion nd interest rtes. Foowing rmpnt intion nd soring interest rtes
in , intion gener fe round the word throughout  nd short-term interest rtes stbiized
during the second hf of the er.
The trjector of monetr poic is importnt becuse when interest rtes rise, bond prices f (nd
vice vers). As such, fixed-income investors stnd to gin from n potenti reduction in oci interest
rtes. Addition, ike the experience with equit fund returns nd ows, net ows to bond funds hve
historic been reted to bond returns (see Figure.).
FIGURE
1.5
Wordwide Net Ses of Reguted Open-End Funds Ws Primri from Inows into
Bond Funds
Billions of US dollars by type of fund, annual
0
-500
500
1,000
1,500
2,000
2,500
3,000
3,500
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total worldwide net sales
Bond
Other*
Balanced/Mixed
Equity
,
,
,
,

,
,338
,
- 

* Other funds incude gurnteed/protected funds, re estte funds, nd other funds.
Note: Reguted open-end funds incude mutu funds, ETFs, nd institution funds.
Source: Interntion Investment Funds Assocition
17
WORLDWIDE REGULATED OPENEND FUNDS
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Ongoing Chrges for UCITS in the Europen Union
The UCITS Directive hs become  gob success stor since its doption in , with net ssets
of €.triion in EU-domicied UCITS t er-end . Investments in these funds re hed b
investors in Europe nd other jurisdictions wordwide. In recent ers, there hs been incresed
ttention to the costs nd chrges pid b shrehoders of investment funds, prticur in Europe.*
For exmpe, in December , the Europen Securities nd Mrkets Authorit (ESMA) issued its
test report investigting costs nd performnce of EU reti investment products.†
Like reguted fund investors in other countries, UCITS investors incur ongoing chrges tht cover
the provision of services, incuding portfoio mngement, dministrtion, compince costs,
ccounting services, eg costs, nd pments to distributors. The tot cost of these chrges is
discosed to investors through either the tot expense rtio (TER), often found in  UCITS’ nnu
report nd other mrketing documents, or the ongoing chrges figure (OCF), found in the Ke
Informtion Document (KID).
On n sset-weighted bsis, verge ongoing chrges of equit nd fixed-income UCITS continued
their downwrd trend in  (Figure.). Since , sset-weighted verge ongoing chrges
for equit nd fixed-income UCITS hve decined percent nd percent, respective. In ,
the sset-weighted verge ongoing chrge for equit funds fe to .percent from .percent
in . In other words, for ever € invested in , fund shrehoders were chrged €.
in ongoing fees. Addition, the sset-weighted verge ongoing chrges for equit nd fixed-
income funds were beow their respective simpe verges, which indictes tht investors tend to
concentrte their ssets in ower-cost funds.
CONTINUED ON THE NEXT PAGE
* Europen Securities nd Mrkets Authorit, Final Report on the 2021 CSA on Costs and Fees. Avibe t www.esma.
europa.eu/sites/default/files/library/esma34-45-1673_final_report_on_the_2021_csa_on_costs_and_fees.pdf.
† Europen Securities nd Mrkets Authorit, Costs and Performance of EU Retail Investment Products 2023. Avibe
t www.esma.europa.eu/sites/default/files/2023-12/ESMA50-524821-3052_Market_Report_on_Costs_and_
Performance_of_EU_Retail_Investment_Products.pdf.
Ongoing Chrges for UCITS in the Europen Union, 
www.ici.org/fies//per-.pdf
 INVESTMENT COMPANY FACT BOOK
18
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Wordwide Net Ses of Mone Mrket Funds
Wordwide net ses of mone mrket funds toted $.triion in , up from $biion in
 (Figure.). The increse in wordwide demnd for mone mrket funds ws spred cross 
geogrphic regions but ws primri driven b  substnti increse in net inows in the United
Sttes. Investor demnd for mone mrket funds in the United Sttes incresed from $biion in
 to $.triion in . In the Asi-Pcific region, mone mrket funds experienced net inows of
$biion in , bout even with the net inows of $biion in .
Investors use mone mrket funds becuse the re profession mnged, tight reguted vehices
with hodings imited to high-quit, short-term debt instruments. As such, the re high iquid, ttrctive,
csh-ike terntives to bnk deposits. Gener, demnd for mone mrket funds is dependent upon
their ieds nd interest rte risk exposure retive to other high-quit fixed-income securities.
Ongoing Chrges for UCITS in the Europen Union, 
Trends in the Europen Investment Fund Industr
www.efm.org/node/
FIGURE
1.6
Investors in UCITS P Beow-Averge Ongoing Chrges
Percent
202220212013202220212013
Equity Fixed income
Simple average ongoing charge
Asset-weighted average ongoing charge
1.73
1.38
1.42
1.12
0.93
1.49
1.21
0.98
0.92
0.69
0.67
1.18
Note: Dt excude ETFs.
Source: Investment Compn Institute ccutions of Morningstr Direct dt. See ICI Research Perspective, “Ongoing Chrges
for UCITS in the Europen Union, .”
19
WORLDWIDE REGULATED OPENEND FUNDS
FIGURE
1.7
Wordwide Net Ses of Mone Mrket Funds Incresed Shrp in 
Billions of US dollars by region, annual
-500
0
500
1,000
1,500
2,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
191
405
82
598
79
706
1,295
673
161
1,524
Total worldwide net sales
Asia-Pacific
Europe
United States
Rest of the world
Source: Interntion Investment Funds Assocition
In the United Sttes, net ses of mone mrket funds incresed becuse of heightened demnd from both
reti nd institution investors. In , mone mrket fund ieds reched their highest eve in more
thn  ers. Both reti nd institution investors were ttrcted to the high mrket ieds nd ow
interest rte risk oered b mone mrket funds, especi in ight of the substnti interest rte votiit
tht bond funds were experiencing during this time.
Demnd for mone mrket funds in the Asi-Pcific region is dominted b Chinese mone mrket funds,
which hod the buk of mone mrket fund tot net ssets in the region. The Peope’s Bnk of Chin
owered interest rtes further in , decresing the oci one-er Lon Prime Rte to .percent.
The reduction in the short-term interest rte ws in response to suggish economic performnce.
Regrdess, net inows into mone mrket funds in the Asi-Pcific region remined positive for the er.
 INVESTMENT COMPANY FACT BOOK
20
Size of Wordwide Reguted Funds in Gob Cpit Mrkets
Reguted funds continue to be n importnt conduit for octing cpit gob, heping finnce
businesses, governments, nd househod ctivities. As of er-end , wordwide cpit mrkets,
s mesured b the vue of equit nd debt securities outstnding, toted $.triion, of which
reguted funds’ net ssets were percent, or $.triion (Figure.).
The shre of wordwide cpit mrkets hed b reguted funds hs grown over the pst decde.
In , wordwide reguted funds hed percent of wordwide cpit mrkets, compred with
percent in . The remining percent were hed b  wide rnge of other investors, such s
centr bnks, sovereign weth funds, pension pns (both defined benefit nd defined contribution),
bnks, insurnce compnies, hedge funds nd privte equit funds, broker-deers, nd househods’
direct hodings of stocks nd bonds.
FIGURE
1.8
Wordwide Reguted Funds Hed  Percent of Wordwide Equit nd Debt Mrkets
Trillions of US dollars, year-end
20232013
2013
2023*
Other investors
Total net assets of worldwide regulated open-end funds
127.1
36.4
188.5
68.9
22%
27%
257.4
163.5
* Dt for wordwide debt mrkets re s of September , .
Note: Reguted open-end funds incude mutu funds, ETFs, nd institution funds.
Source: Investment Compn Institute ccutions of dt from the Interntion Investment Funds Assocition, Word Federtion of
Exchnges, Bnk for Interntion Settements, nd Refinitiv
21
WORLDWIDE REGULATED OPENEND FUNDS
Fund Ownership in Mrket-Bsed Versus Bnk-Bsed Economies
Gener speking,  jurisdiction’s finnci sstem cn be described s either mrket-bsed or bnk-
bsed depending on how its econom depos svings nd rises cpit for the production of goods nd
services. For exmpe, mn jurisdictions within the Europen Union re considered to hve bnk-bsed
economies, since bnks re more often used to mobiize investor svings nd octe cpit. Converse,
the United Sttes is usu considered  mrket-bsed econom since cpit mrkets re the min
conduit for investor svings nd depoing cpit. The structure of cpit oction in n econom is 
fctor tht cn inuence the demnd for reguted funds becuse the tend to mke up  greter shre of
househod weth in mrket-bsed economies.
In the Europen Union nd Jpn, where investors hve trdition octed svings nd cpit
to bnks, househods hod more of their finnci weth in bnk products. Europen nd Jpnese
househods hod percent nd percent, respective, of their finnci weth in bnks, with  more
modest shre in reguted funds (Figure.). B comprison, househods in the United Sttes hod  much
ower shre of their finnci weth in bnks nd  much rger shre in reguted funds.
FIGURE
1.9
US Househods Hod More of Their Weth in Reguted Funds; Bnk-Centric
Countries Hve  Lower Shre
Percentage of household
1
financial wealth, year-end 2023
JapanEuropean Union³United States
53
32
22
12
10
5
Bank deposits and currency
Regulated funds
2
Househods incude househods nd nonprofit institutions serving househods.
For the United Sttes, reguted funds incude tot net ssets hed b mutu funds nd ETFs. For the Europen Union nd
Jpn, reguted funds incude investment fund shres s defined b their respective sstems of ntion ccounts.
Dt for Pond re s of :Q.
Sources: Investment Compn Institute, Feder Reserve Bord, Eurostt, nd Bnk of Jpn
CHAPTER
US-Registered Investment
Companies
Registered investment compnies re n importnt segment of the sset mngement
industr in the United Sttes. US-registered investment compnies p  mjor roe in
the US econom nd finnci mrkets nd  growing roe in gob finnci mrkets.
These funds mnged $. triion in tot net ssets t er-end ,
rge on behf of more thn  miion US reti investors. The industr
hs experienced robust growth over the pst qurter centur from sset
pprecition nd strong demnd from househods due to rising househod
weth, the ging US popution, nd the evoution of empoer-bsed
retirement sstems. US funds supp investment cpit in securities
mrkets round the word nd re importnt investors in the US stock,
bond, nd mone mrkets.
IN THIS CHAPTER
 Number nd Assets of Investment Compnies
 Americns’ Continued Reince on Investment Compnies
 Roe of Investment Compnies in Finnci Mrkets
 Growth of Index Funds
 Fund Compexes nd Sponsors
 Environment, Soci, nd Governnce Investing
 Investment Compn Empoment
CHAPTER 
 INVESTMENT COMPANY FACT BOOK
22
2
23
USREGISTERED INVESTMENT COMPANIES
Number nd Assets of Investment Compnies
There were , investment compnies
*
oered b US finnci services compnies t er-end 
(Figure.). The over number of investment compnies is down from  decde go s n increse in the
number of exchnge-trded funds (ETFs) on prti oset decreses in the number of unit investment
trusts (UITs), mutu funds, nd trdition cosed-end funds (CEFs).
* The terms investment companies nd US investment companies re used t times throughout this book in pce of US-registered
investment companies. US-registered investment compnies re open-end mutu funds, ETFs, trdition CEFs, nd UITs.
FIGURE
2.1
Most Investment Compn Tot Net Assets Are in Mutu Funds
Year-end 2023
3,750
UITs
$249
Traditional CEFs
3
8,582
Mutual funds
1
$25,519
Mutual funds
$8,085
ETFs
3,304
ETFs²
Total number of funds: 16,038Total net assets: $33,930
Number of funds
402
Traditional CEFs
3
$77
UITs
Total net assets
4
Billions of dollars
Mutu fund dt for number of funds incude mutu funds tht invest primri in other mutu funds.
ETF dt for number of funds incude ETFs tht invest primri in other ETFs.
CEF dt incude on trdition CEFs. CEF dt for tot net ssets incude preferred shre csses.
Tot investment compn ssets incude mutu fund hodings of CEFs nd ETFs.
 INVESTMENT COMPANY FACT BOOK
24
Tot net ssets in US-registered investment compnies incresed in  to  er-end eve
of $.triion, with the vst mjorit hed b mutu funds nd ETFs. US-registered investment
compn tot net ssets were concentrted in ong-term funds, with equit funds one hoding
$.triion—percent of  investment compn tot net ssets t er-end  (Figure.).
Domestic equit funds (those tht invest primri in shres of US corportions) hed $.triion in net
ssets; word equit funds (those tht invest significnt in shres of non-US corportions) ccounted for
$.triion. Bond funds hed $.triion in ssets, whie mone mrket funds, hbrid funds, nd other
funds—such s those tht invest primri in commodities—hed the remining $.triion.
During , mutu funds recorded n ggregte $biion in positive net new csh ow s demnd
for mone mrket funds overwheming oset outows from ong-term mutu funds (see Figure.).
Mutu fund shrehoders reinvested $biion in income dividends nd $biion in cpit gins
distributions tht mutu funds pid out during the er. Investors continued to show strong demnd for
ETFs, with net shre issunce (which incudes reinvested dividends) toting $biion in  (see
Figure.). UITs experienced tot deposits of $biion nd trdition CEFs hd net redemptions of
$miion (seeFigure.).
FIGURE
2.2
The Mjorit of Investment Compn Tot Net Assets Were in Equit Funds
Percentage of total net assets, year-end 2023
46%
Domestic equity funds
19%
Bond funds
13%
World equity funds
17%
Money market funds
5%
Hybrid and other funds
1
Investment company total net assets:
2
$33.9 trillion
The other funds ctegor incudes ETFs—both registered nd not registered under the Investment Compn Act of —tht invest
primri in commodities, currencies, nd futures.
Tot investment compn ssets incude mutu fund hodings of CEFs nd ETFs. CEF dt incude on trdition CEFs. CEF dt for
tot net ssets incude preferred shre csses.
25
USREGISTERED INVESTMENT COMPANIES
Americns’ Continued Reince on Investment Compnies
Househods mke up the rgest group of investors in funds, nd registered investment compnies
mnged .percent of househod finnci ssets t er-end  (Figure.). The growth of mutu
funds inside individu retirement ccounts (IRAs) nd defined contribution (DC) pns, prticur
(k)pns, expins some of the incresed househod reince on investment compnies in the pst
three decdes. Mutu funds in IRAs nd DC pns mde up .percent of househod finnci ssets t
er-end , up from .percent in .
FIGURE
2.3
Househods Re More on Investment Compnies—Prt from Incresed Hodings
Inside DC Pns nd IRAs
Percentage of US household financial assets,
1
year-end
20231990
Other household financial assets held in registered investment companies
Mutual funds in IRAs and DC plans²
22.6
1.3
7.3
10.0
6.0
12.7
Househod finnci ssets hed in registered investment compnies incude hodings of mutu funds, ETFs, CEFs, nd UITs. Mutu
funds hed in empoer-sponsored DC pns, IRAs, nd vribe nnuities re incuded.
DC pns incude privte-sector empoer-sponsored DC pns (such s (k) pns), (b) pns, nd  pns.
Sources: Investment Compn Institute nd Feder Reserve Bord
 INVESTMENT COMPANY FACT BOOK
26
LEARN
MORE
Businesses nd other institution investors so re on funds. For instnce, institutions cn use mone
mrket funds to mnge some of their csh nd other short-term ssets. Institution investors so hve
contributed to the growing demnd for ETFs. Investment mngers—for mutu funds, pension funds,
hedge funds, nd insurnce compnies—use ETFs to invest in mrkets, mnge iquidit nd investor
ows, or hedge their exposures.
Roe of Investment Compnies in Finnci Mrkets
Investment compnies hve been importnt investors in domestic finnci mrkets for much of the pst
ers. The hve hed  rge stbe shre of the securities outstnding cross  vriet of sset
csses in recent ers, min through mutu funds. At er-end , investment compnies hed
percent of US corporte equities outstnding, simir to its eve t er-end  (Figure.).
Investment compnies hed percent of bonds issued b US corportions nd foreign bonds hed b
US residents t er-end  nd percent of the US Tresur nd government genc securities
outstnding. Investment compnies so hve been importnt investors in the US municip securities
mrket, hoding percent of the securities outstnding t er-end . Fin, mutu funds
(primri prime mone mrket funds) hed percent of the US commerci pper mrket— critic
source of short-term funding for mn mjor corportions round the word.
Mone Mrket Fund Resource Center
www.ici.org/mmfs
27
USREGISTERED INVESTMENT COMPANIES
FIGURE
2.4
Investment Compnies Chnne Investment to Stock, Bond, nd Mone Mrkets
Percentage of total market value of securities held by investment companies, year-end
2023
2022
2021
2020
2023
2022
2021
2020
2023
2022
2021
2020
2023
2022
2021
2020
2023
2022
2021
2020
US corporate
equity
US and foreign
corporate bonds*
US Treasury and
government
agency securities
US municipal
securities
Commercial
paper
Long-term mutual funds
Money market funds
Other registered investment companies
22
25
23
8
10
11
10
35
24
33
33
33
18
16
18
15
6
6
5
6
24
23
23
22
69
6
1
1
6
6
13
6
12
16
15
20
19
19
4
5
4
5
26
22
29
27
27
19
20
15
24
14
16
22
17
1
51
8
2
2
3
3
4
2
2
2
* Mone mrket fund hodings of US nd foreign corporte bonds rounded to ess thn . percent in  ers.
Sources: Investment Compn Institute, Feder Reserve Bord, nd Word Federtion of Exchnges
 INVESTMENT COMPANY FACT BOOK
28
Growth of Index Funds
Index funds re designed to trck the performnce of  mrket index. To do this, the fund mnger
purchses  the securities in the index or  representtive smpe of them—mirroring the index
composition—so tht the performnce of the fund trcks the vue of the index. This pproch to portfoio
mngement is the primr reson tht index funds tend to hve beow-verge expense rtios (see
Figures . nd .).
Index mutu funds were first oered in the s, foowed b index ETFs in the s. B er-end ,
tot net ssets in these two index fund ctegories hd grown to $.triion. Aong with this growth, index
fund ssets hve become  rger shre of over fund ssets. At er-end , index mutu funds nd
index ETFs together ccounted for percent of ssets in ong-term funds, up from percent t er-end
 (Figure.). Nevertheess, ctive mnged funds sti ccounted for more thn hf of ong-term
fund ssets (percent) t er-end .
FIGURE
2.5
Index Funds Hve Grown s  Shre of the Fund Mrket
Percentage of long-term total net assets, year-end
Actively managed mutual funds and ETFs
Index ETFs
Index mutual funds
2023202020152010
72
14
15
81
9
10
52
27
21
60
21
20
40%
28%
19%
48%
Total net assets
Trillions of dollars
$9.9 $14.9$24.8 $27.6
Note: Dt excude mone mrket funds. Dt for ETFs excude non– Act ETFs.
29
USREGISTERED INVESTMENT COMPANIES
The growth in index funds hs been concentrted in funds tht invest primri in US equities, with
percent of inows into index funds over the pst decde going to domestic equit funds. But despite
their significnt growth, index domestic equit mutu funds nd ETFs remin retive sm investors
in the US stock mrkets, hoding on percent of the vue of US stocks t er-end  (Figure.).
Active mnged domestic equit mutu funds nd ETFs hed nother percent, whie other investors—
incuding hedge funds, pension funds, ife insurnce compnies, nd individus—hed the mjorit
(percent).
FIGURE
2.6
Index Domestic Equit Fund Shre of US Stock Mrket Is Sm
Percentage of US stock market capitalization, year-end
20232022202120202019201820172016201520142013
Other investors
Actively managed domestic equity mutual funds and ETFs
Index domestic equity mutual funds and ETFs
13
15
71
16
16
68
15
15
69
13
16
71
12
17
71
11
18
71
10
18
72
9
19
72
18
13
68
18
14
69
17
15
68
Sources: Investment Compn Institute nd Word Federtion of Exchnges
 INVESTMENT COMPANY FACT BOOK
30
Unit Investment Trusts
Unit investment trusts (UITs) re registered investment compnies with chrcteristics of both mutu
funds nd CEFs. Like mutu funds, UITs issue redeembe shres (ced units), nd ike CEFs, the
tpic issue  specific, fixed number of shres. But unike either mutu funds or CEFs, UITs hve
 preset termintion dte bsed on the portfoio’s investments nd the UIT’s investment gos. UITs
investing in ong-term bonds might hve  preset termintion dte of  to  ers, depending
on the mturit of the bonds the hod. UITs investing in stocks might seek to cpture cpit
pprecition in  few ers or ess. When  UIT termintes, proceeds from the securities re pid
tounit hoders or, t  unit hoder’s eection, reinvested in nother trust.
UITs f into two min ctegories: debt (or bond) trusts nd equit trusts. Debt trusts re cssified
s txbe or tx-free; equit trusts re cssified s domestic or interntion/gob. The first UIT,
introduced in , hed tx-free bonds, nd historic, most UIT tot net ssets were invested
in bonds. Equit UITs, however, hve grown in popurit over the pst three decdes. At er-end
, ssets in equit UITs fr exceeded those of bond UITs, constituting percent of UIT tot net
ssets (Figure.). The number of trusts outstnding hs decresed, s sponsors hve creted fewer
new trusts nd existing trusts hve reched their preset termintion dtes.
Feder w requires tht UITs hve  rge fixed portfoio—one tht is not ctive mnged
or trded. Once the trust’s portfoio hs been seected, its composition m chnge on in ver
imited circumstnces. Most UITs hod  diversified portfoio, described in deti in the prospectus,
with securities profession seected to meet  stted investment go, such s growth, income,
orcpit pprecition.
Investors cn obtin UIT price quotes from brokerge or investment firms nd investment compn
websites. Some UITs ist their prices on the Nsdq Fund Network. Some broker-deers oer their
own trusts or se trusts oered b ntion recognized independent sponsors. Units of these
trusts cn be bought through their registered representtives. Units cn so be bought from the
representtives of smer investment firms tht se trusts sponsored b third-prt firms.
Though  fixed number of units of  UIT re sod in  pubic oering,  trust sponsor is ike to
mintin  secondr mrket, where investors cn se their units bck to the sponsor nd other
investors cn bu those units. Even bsent  secondr mrket, UITs re required b w to redeem
outstnding units t their net sset vue (NAV), which is bsed on the undering securities’ current
mrket vue.
CONTINUED ON THE NEXT PAGE
31
USREGISTERED INVESTMENT COMPANIES
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Unit Investment Trusts, 
FIGURE
2.7
Tot Net Assets of UITs Hve Shifted from Tx-Free Debt Trusts to Equit Trusts
Billions of dollars, year-end
2023202220212020201520102005200019951990
3,966 3,750 4,112 4,310 5,188 5,971 6,019 10,072 12,979 12,131
94
78
51
41
74
73
105
73
95
11
6
13
10
23
51
92
5
3
2
4
2
4
8
9
1
80
70
88
34
1
4
68
77
1
4
72
29
48
14
4
Equity trust assets
Taxable debt trust assets
Tax-free debt trust assets
Total number of trusts
Unit Investment Trust Dt
www.ici.org/research/stats/uit
 INVESTMENT COMPANY FACT BOOK
32
Fund Compexes nd Sponsors
At er-end ,  fund sponsors from round the word competed in the US mrket to provide
investment mngement services to fund investors (Figure.). The decine in the number of fund sponsors
since er-end  m be due to  vriet of business decisions, incuding rger fund sponsors
cquiring smer ones, fund sponsors iquidting funds nd eving the business, or rger sponsors
seing their dvisor businesses. Prior to , the number of fund sponsors hd been incresing s the
econom nd finnci mrkets recovered from the – finnci crisis. Over, from er-end
 through er-end ,  sponsors entered the mrket whie  eft, for  net decrese of .
FIGURE
2.8
Number of Fund Sponsors Hs Gener Decined Since 
20232022202120202019201820172016201520142013
823
873
879
853
848
849
827
805
825
815
797
Total fund sponsors at year-end
Fund sponsors entering
Fund sponsors leaving
82
50
79
29
54
48
51
42
47
77
44
43
42
64
34
56
58
38
44
54
30
48
33
USREGISTERED INVESTMENT COMPANIES
Mn recent entrnts to the fund industr hve dopted soutions in which the fund’s sponsor rrnges
for  third prt to provide certin services (e.g., udit, trustee, some eg) through  turnke setup. This
ows the sponsor to focus more on mnging portfoios nd gthering ssets. Through n rrngement
known s  series trust, the third prt provides services to mutipe independent fund sponsors under
 singe compex tht serves s n “umbre.” This cn be cost-ecient becuse the costs of operting
funds re spred cross the combined ssets of  number of funds in the series trust.
The incresed vibiit of other investment products hs ed to chnges in how investors re octing
their portfoios. Thepercentge of mutu fund compnies retining ssets nd ttrcting net new
investments gener hs been ower in recent ers. In , percent of fund compexes sw positive
ows to their ong-term mutu funds, whie percent of ETF sponsors hd positive net shre issunce
(Figure.).
FIGURE
2.9
Esier Access to Other Investment Products Hs Dmpened Inows into Long-Term
Mutu Funds
Percentage of fund complexes with positive net ows
Long-term mutual funds
ETFs
20232022202120202019201820172016201520142013
82
33
88
69
49
26
74
28
81
56
79
54
81
43
71
38
93
36
31
38
74
75
Note: Long-term mutu fund dt incude net new csh ow nd reinvested dividends; ETF dt for net shre issunce incude
reinvested dividends.
 INVESTMENT COMPANY FACT BOOK
34
The concentrtion of mutu fund nd ETF ssets mnged b the rgest fund compexes hs incresed
over time. The shre of ssets mnged b the five rgest firms rose from percent t er-end  to
percent t er-end  (Figure.). Some of the increse in mrket shre occurred t the expense
of the midde tier of firms—those rnked from  to —whose mrket shre fe from percent in  to
percent in .
At est two fctors hve contributed to the rise in industr concentrtion. First, the incresed concentrtion
reects the growing popurit of index funds—the  rgest fund compexes mnge most of the ssets
in index mutu funds. Active mnged domestic equit mutu funds hd outows in ever er fter
, whie index domestic equit mutu funds hd inows in most of these ers. Index domestic equit
ETFs hd positive net shre issunce in ech of these ers. Second, gener strong inows over the
pst decde to bond mutu funds nd ETFs (see Figures . nd .), which re fewer in number nd re
ess ike to be oered b smer fund sponsors, heped boost the shre of ssets mnged b rge
fund compexes.
Mcroeconomic conditions nd competitive dnmics cn ect the supp of funds oered for se. Fund
sponsors crete new funds to meet investor demnd nd merge or iquidte those tht do not ttrct
sucient investor interest. A tot of  mutu funds nd ETFs opened in , down sight from  in
 nd ower thn the – nnu verge of  (Figure.). The number of mutu fund nd
ETF mergers nd iquidtions incresed substnti— in  compred with  in .
FIGURE
2.10
Shre of Mutu Fund nd ETF Assets t the Lrgest Fund Compexes Hs Incresed
Percentage of total net assets of mutual funds and ETFs, year-end
      
Lrgest  compexes       
Lrgest  compexes       
Lrgest  compexes       
Note: Dt for ETFs excude non– Act ETFs.
35
USREGISTERED INVESTMENT COMPANIES
Fund Prox Voting Reects Heterogeneous Industr
Investment compnies re shrehoders of pubic compnies nd hve hed  sted shre of
US-issued corporte equities outstnding over the pst sever ers (Figure.). Like n compn
shrehoder, the re entited to vote on prox proposs put forth b  compn’s bord or its
shrehoders. Funds norm deegte prox voting responsibiities to fund dvisers, which hve 
fiducir dut to vote in the best interest of fund shrehoders.
During prox er  (the  months tht ended June , ), shrehoders of the ,
rgest US pubic compnies considered , proposs—percent (,) of these were
proposed b mngement nd percent () were submitted b shrehoders. Investment
compnies cst ner .miion votes on these proposs, with ech investment compn voting,
on verge, on bout , seprte prox proposs. Becuse mngement proposs ccount
for the buk of prox proposs, percent of funds’ votes were cst on mngement proposs
reted to uncontested eections of directors, with n ddition percent nd percent reted to
mngement proposs on mngement compenstion nd rtifiction of udit firms, respective.
CONTINUED ON THE NEXT PAGE
FIGURE
2.11
Mutu Funds nd ETFs Enter nd Exit in  Competitive Mrket
Number of funds
20232022202120202019201820172016201520142013
Opened funds
Merged/Liquidated funds
596
840
696
460
749
465
688
648
848
458
859
420
880
540
684
706
714
604
740
596
536
618
Note: Dt incude mutu funds tht do not report sttistic informtion to the Investment Compn Institute nd mutu funds tht
invest primri in other mutu funds. ETF dt incude ETFs tht invest primri in other ETFs.
 INVESTMENT COMPANY FACT BOOK
36
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Fund Prox Voting Reects Heterogeneous Industr, 
Investment compnies voted in fvor of mngement proposs percent of the time. The strong
support for mngement prox proposs ike reects tht the vst mjorit of them re not
controversi—percent of mngement proposs were uncontested eections of directors nd
rtifictions of the udit firms tht compnies seected.
During the sme prox er, percent of the votes tht investment compnies cst were on
shrehoder prox proposs. Among the shrehoder proposs, percent were reted
to soci nd environment mtters; percent to shrehoder rights nd nti-tkeover issues;
percent to bord structures nd eections; nd the reminder to compenstion mtters nd
misceneous issues. Shrehoder prox proposs received support from investment compnies,
onverge, percent of the time.
Investment compnies’ support for shrehoder proposs vried considerb depending on  rnge
of fctors. These fctors incuded, mong other things, the detis of the propos, the issuer to
whom the propos ppied, nd the bckdrop nd context in which the propos ws set. Investment
compnies tend to oer more support for shrehoder prox proposs tht re ike to increse their
rights s compn shrehoders. For exmpe, investment compnies voted in fvor of shrehoder
prox proposs reted to shrehoder rights or nti-tkeover mesures percent of the time in
prox er .
Investment compnies, on verge, hve provided more imited support for soci nd environment
proposs. In prox er , these proposs received  fvorbe vote percent of the time.
Averge eves of support cn msk importnt nunces of how investment compnies vote on such
issues. These kinds of proposs, though cssified gener s “soci nd environment,” cover
 wide rr of issues, incuding the environment, diversit in hiring prctices, humn rights mtters,
nd the sfet of  compn’s business opertions.
In ddition, these proposs must be viewed in context. For exmpe, suppose virtu identic
proposs re directed to two dierent compnies. An investment compn might view the propos
s pproprite for the first compn, but inpproprite for the second becuse the tter hs red
tken steps to ddress the propos’s concerns.
In short, there is no one-size-fits- description of how funds vote, other thn to s tht investment
compnies seek to vote in the interests of their shrehoders nd in  w tht is consistent with their
investment objectives nd poicies.
Prox Voting Resource Center
www.ici.org/proxy_voting
37
USREGISTERED INVESTMENT COMPANIES
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Environment, Soci, nd Governnce Investing
Perhps one of the most significnt recent gob trends is the incresing ttention being pid to
environment, soci, nd governnce (ESG) mtters. These mtters vr wide but re gener
considered to incude topics reted to cimte chnge, diversit nd incusion, humn rights, the rights
of compn shrehoders, nd compn compenstion structures. The fund industr is responding to
incresed investor interest in ESG investing b, mong other things, creting new funds tht expicit tior
their investments to specific ESG criteri.
Funds consider ESG fctors to vring degrees. For decdes, some funds hve incorported ESG fctors
into their investment processes s  w to enhnce fund performnce, mnge investment risks, nd
identif emerging investment risks nd opportunities, just s the woud consider mcroeconomic or
interest rte risks; idiosncrtic business risks; nd investment exposures to prticur compnies,
industries, or geogrphic regions. Becuse these funds “integrte” ESG fctors into the investment
process, this tpe of investing is known s ESG integrtion.
Funds’ use of ESG integrtion is distinct from funds’ use of “sustinbe investing strtegies,” which use
ESG nsis s  significnt prt of the fund’s investment thesis s  w to pursue investment returns nd
ESG-reted outcomes.
Approches to ESG Investing
The investment strtegies funds use vr, s do the ws the describe their pproches. This section
describes some of the most common pproches.
■
Excusionr investing: Investment strtegies tht excude, or “screen out,” investments in prticur
industries or compnies tht do not meet certin ESG criteri. This m so be described s
negtive screening, sustinbe investing, or soci responsibe investing (SRI).
■
Incusionr investing: Investment strtegies tht gener seek investment returns b pursuing
strtegic investing thesis focusing on investments tht sstemtic tit  portfoio bsed on
ESG fctors ongside trdition finnci nsis. This m so be described s best-in-css,
ESG themtic investing, ESG tit, positive screening, or sustinbe investing.
■
Impct investing: Investment strtegies tht seek to generte positive, mesurbe soci nd
environment impct ongside  finnci return. This m so be described s communit,
go-bsed, sustinbe, or themtic investing.
These common pproches to ESG investing re not mutu excusive— singe fund m use mutipe
pproches (e.g.,  best-in-css fund tht excudes certin tpes of investments). As  resut, seeking to
cssif funds tht invest ccording to ESG criteri s soe excusionr, incusionr, or impct cn be
chenging. Apping ICI’s ong-stnding gener pproch to cssifing funds enbes reserch into
these funds (e.g., trcking dt nd monitoring trends).
ESG Resource Center
www.ici.org/esg
 INVESTMENT COMPANY FACT BOOK
38
How ICI Ctegorizes Funds for Reserch nd
Sttistic Purposes
ICI seeks to ctegorize funds s objective s possibe b pping predetermined rues nd
definitions to the prospectus nguge of mutu funds, ETFs, nd CEFs, with  speci focus on the
“investment objective” nd “princip investment strtegies” sections.
For exmpe, ICI Reserch uses prospectus nguge to determine which of four brod ctegories
to pce  fund in: equit, bond, hbrid, or mone mrket. Funds re then pced in subctegories—
for exmpe, cssifing equit funds s rge-, mid-, or sm-cp; or bond funds s investment
grde or high-ied. To keep fund cssifictions up to dte, ICI monitors funds’ prospectuses for
mteri revisions.
This pproch produces fund cssifictions tht re consistent nd retive stbe, which is ver
hepfu when monitoring current nd historic trends in fund dt.
Using ICI’s Approch to Cssif Funds Tht Invest According to ESG Criteri
ICI Reserch exmines the prospectuses of funds to cssif those tht invest ccording to ESG criteri
using the sme pproch tht it does for other ctegories cross  funds. In prticur, ICI ooks for
nguge indicting tht  fund pces n importnt nd expicit emphsis on environment, soci, or
governnce criteri to chieve certin gos.
Foowing this pproch, in ,  mutu funds nd ETFs with ssets of $biion were cssified
gener s investing ccording to excusionr, incusionr, or impct investing ESG criteri
(Figure.). The number of ESG-criteri funds hs incresed in ech er since  (the er ICI
begn trcking dt for these funds) reecting growing investor interest in these funds. Demnd for
ESG-criteri funds grew stedi between  nd  but hs since bted—ESG-criteri funds hd
net outows of $biion in  (Figure.).
ICI cssifies ESG-criteri funds into groups bsed on the frmeworks or guideines expressed t the
forefront of their princip investment strtegies sections.
■
Brod ESG focus: These funds focus brod on ESG mtters. The consider  three eements of ESG
(rther thn focusing on one or two of the considertions) or m incude ESG in their nmes. Index
funds in this group m trck  soci responsibe index such s the MSCI KLD  Soci Index.
■
Environment focus: These funds focus more nrrow on environment mtters. The m incude
terms such s terntive energ, cimte chnge, cen energ, environment soutions, or ow
crbon in their princip investment strtegies or fund nmes.
■
Reigious vues focus: These funds invest in ccordnce with specific reigious vues.
■
Other focus: These funds focus more nrrow on some combintion of environment, soci, nd/
or governnce eements, but not  three. The often negtive screen to eiminte certin tpes of
investments.
39
USREGISTERED INVESTMENT COMPANIES
FIGURE
2.12
Number of Funds Tht Invest According to ESG Criteri Continued to Rise
By focus, year-end
2023202220212020201920232022202120202019
186
58
140
100
484
576
$278
$393
244
64
151
117
730
291
112
178
149
$88
$13
$105
$73
$145
$32
$120
$96
$553
$43
$151
$145
$214
863
$463
$42
$128
$92
$201
$532
$51
$146
$107
$228
417
131
185
130
913
459
137
190
127
Other focus
Religious values focus
Environmental focus
Broad ESG focus
Total net assets
Billions of dollars
Number of funds
Note: Dt incude mutu funds nd ETFs. Dt incude mutu funds tht invest primri in other mutu funds nd ETFs tht invest
primri in other ETFs.
FIGURE
2.13
Demnd for ESG-Criteri Funds Turned Negtive in 
Net new cash ow to mutual funds and net share issuance of ETFs, billions of dollars, annual
-20
0
20
40
60
80
20232022202120202019
23
77
51
3
-9
Note: Dt incude mutu funds nd ETFs. Dt incude mutu funds tht invest primri in other mutu funds nd ETFs tht invest
primri in other ETFs.
 INVESTMENT COMPANY FACT BOOK
40
Investment Compn Empoment
Registered investment compnies tpic do not hve empoees—insted, the contrct with other
businesses to provide services to the fund. Except for UITs, funds in the United Sttes hve fund bords
tht oversee the mngement of the fund nd represent the interests of the fund shrehoders. Fund
bords must pprove  mjor contrcts between the fund nd its service providers, incuding the dvisor
contrct with  fund’s investment dviser, who is usu so the fund’s sponsor.
Fund sponsors nd third-prt service providers oer dvisor, recordkeeping, dministrtive, custod,
nd other services to funds nd their investors. Investment compn–reted empoment in the United
Sttes ws .miion in  (Figure.). For mn industries, empoment tends to be concentrted
in octions where the industr begn. The sme is true for investment compnies: those octed in
Msschusetts nd New York, er hubs of investment compn opertions, empo percent of fund
industr workers. As the industr hs grown, other sttes—incuding Ciforni, Forid, nd Texs—hve
become mjor centers of fund industr empoment. Fund compnies in these three sttes empoed n
ddition percent of US fund industr empoees in .
41
USREGISTERED INVESTMENT COMPANIES
FIGURE
2.14
Investment Compnies Provide Empoment for . Miion Individus Across the
United Sttes
Estimated number of employees of fund sponsors and their service providers by state, 2021
80,000 or more
25,000 to 79,999
20,000 to 24,999
10,000 to 19,999
3,000 to 9,999
Less than 3,000
Total investment company–related national employment: 1.1 million
Source: Investment Compn Institute ccutions of  NAICS dt from The Business Dnmics Reserch Consortium:  project of
the Universit of Wisconsin, Institute for Business nd Entrepreneurship.
CHAPTER
US Mutual Funds
A mutu fund is n investment compn tht poos mone from shrehoders
nd invests in  portfoio of securities. In , miion individu investors in
.miion US househods owned mutu funds, reing on them to meet ong-term
person finnci objectives, such s prepring for retirement, eduction, or  home
purchse. US househods nd institutions so use mone mrket funds s csh
mngement toos. Mutu funds, incuding mone mrket funds, hd
net inows of $biion in , or.percent of er-end  tot
net ssets. Chnging demogrphics, portfoio rebncing, nd investors’
rections to US nd wordwide economic nd finnci conditions p
importnt roes in determining how demnd for specific tpes of mutu
funds—nd for mutu funds in gener—evoves.
IN THIS CHAPTER
 Overview of Mutu Fund Trends
 Deveopments in Mutu Fund Fows
 Equit Mutu Funds
 Bond Mutu Funds
 Growth of Other Investment Products
 Mone Mrket Funds
CHAPTER 
 INVESTMENT COMPANY FACT BOOK
42
3
43
US MUTUAL FUNDS
LEARN
MORE
Overview of Mutu Fund Trends
With $.triion in tot net ssets, the US mutu fund industr remined the rgest in the word t
er-end . The mjorit of US mutu fund net ssets t er-end  were in ong-term mutu
funds, with equit funds one mking up percent of US mutu fund net ssets. Mone mrket funds
were the second-rgest ctegor, with percent of net ssets. Bond funds (percent) nd hbrid funds
(percent) hed the reminder.
Investor Demnd for US Mutu Funds
A vriet of fctors inuence investor demnd for mutu funds, such s funds’ biit to ssist investors
in chieving their investment objectives. For exmpe, US househods re on equit, bond, nd hbrid
mutu funds to meet ong-term person finnci objectives, such s prepring for retirement, sving
for emergencies, or sving for eduction. US househods, s we s businesses nd other institution
investors, use mone mrket funds s csh mngement toos becuse the provide  high degree of
iquidit nd ccess to previing short-term mrket ieds.
Investor demnd for mutu funds incresed in —driven b significnt inows into mone mrket funds
tht more thn oset outows from ong-term funds. Mone mrket funds experienced strong demnd s
investors were ttrcted to the highest short-term ieds in the more thn  ers. B contrst, equit
mutu funds experienced outows in  (despite strong stock mrket returns), reecting n ongoing
shift to other products. Addition, bond mutu funds experienced modest outows, which m reect
investors shifting some of their bond fund positions into mone mrket funds to mitigte interest rte risk
mid substnti interest rte votiit.
Month Trends in Mutu Fund Investing
www.ici.org/research/stats/trends
 INVESTMENT COMPANY FACT BOOK
44
FIGURE
3.1
Mutu Funds Enter nd Exit the Industr Becuse of Competition nd
Investor Demnd
20232022202120202019201820172016201520142013
172
211
175
177
126
115
340
389
434
288
235
171
225
227
362
482
453
605
661
699
282
291
512
166
342
301
508
228
430
273
406
600
609
465
361
412
340
111
343
170
454
658
Opened mutual funds
Merged mutual funds
Liquidated mutual funds
241
179
Note: Dt incude mutu funds tht do not report sttistic informtion to the Investment Compn Institute nd mutu funds tht
invest primri in other mutu funds.
Entr nd Exit of US Mutu Funds
Mutu fund sponsors crete new funds to meet investor demnd, nd the merge or iquidte those
tht do not ttrct sucient investor interest. A tot of  mutu funds opened in , down
substnti from  (Figure .). This decine ws driven primri b  drop-o in the number of
equit fund unches. During the sme time, the number of mutu funds tht were either merged or
iquidted incresed percent to  funds s sponsors eiminted more equit mutu funds from
their ineups.
45
US MUTUAL FUNDS
Investors in US Mutu Funds
Demnd for mutu funds is, in prt, reted to the tpes of investors who hod mutu fund shres. Reti
investors (i.e., househods) hed the vst mjorit (percent) of the $.triion in US mutu fund tot
net ssets t er-end  (Figure .). When ooking t on ong-term mutu funds, the shre of net
ssets hed b reti investors ws even higher (percent). Reti investors so hed substnti mone
mrket fund net ssets ($.triion), but this ws  retive sm shre (percent) of their tot mutu
fund net ssets ($.triion).
B contrst, institution investors such s nonfinnci businesses, finnci institutions, nd nonprofit
orgniztions hed  retive sm portion of mutu fund net ssets. At er-end , institutions
hed percent of mutu fund net ssets (Figure .). The mjorit (percent) of the $.triion
tht institutions hed in mutu funds ws in mone mrket funds, becuse one of the primr resons
institutions use mutu funds is to hep mnge their csh bnces.
FIGURE
3.2
Househods Hed  Percent of Mutu Fund Tot Net Assets
Trillions of dollars, year-end 2023
Mutual fund total net assets: $25.5 trillion
Long-term mutual fund total net assets: $19.6 trillion
Money market fund total net assets: $5.9 trillion
$2.0
Institutional investors’ money market funds
$3.9
Households’ money market funds*
$18.6
Householdsʼ long-term mutual funds*
$1.0
Institutional investors’ long-term mutual funds
* Mutu funds hed s investments in individu retirement ccounts, defined contribution retirement pns, vribe nnuities,  pns,
nd Coverde eduction svings ccounts re counted s househod hodings of mutu funds.
 INVESTMENT COMPANY FACT BOOK
46
Deveopments in Mutu Fund Fows
Over demnd for mutu funds s mesured b net new csh ow—new fund ses ess
redemptions, pus net exchnges—incresed in  (Figure .). In , mutu funds hd net
inows of $biion (.percent of er-end  tot net ssets), foowing net outows of
$.triion in . Long-term mutu funds experienced net outows of $biion in , whie
mone mrket funds sw net inows of $biion. A number of fctors—incuding rising short-term
interest rtes, ongoing demogrphic trends, nd demnd for indexed products—ppered to inuence
US mutu fund ows in .
FIGURE
3.3
Inows to Mone Mrket Funds More Thn Oset Outows from Long-Term
MutuFunds in 
Billions of dollars, annual
-1,500
-1,000
-500
0
500
1,00 0
1,500
Total net new cash flow
Equity, bond, and hybrid mutual funds
Money market funds
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
106
-98
-223
178
-188
453
202
357
-1,130
292
47
US MUTUAL FUNDS
The US Econom nd Finnci Mrkets in 
Despite continued monetr tightening b the Feder Reserve nd periods of heightened uncertint,
 proved to be  strong er for the US econom nd finnci mrkets. The US econom grew t
 robust .percent rte in , defing concerns of  wide nticipted recession. Strong consumer
spending nd sted job cretion fueed this economic growth. In , consumer spending (djusted
for intion) expnded b .percent. Addition, the econom dded miion jobs whie the
unempoment rte remined beow percent (despite  modest increse during the er).
Another positive deveopment for the econom ws  significnt decine in the intion rte in .
Intion esed substnti from .percent in  to .percent in  s the Feder Reserve
continued its monetr tightening—rising the feder funds rte b percentge point over four
-bsis-point rte hikes to end the er t  trget rnge of . to .percent.
The modertion in intion boosted investor confidence tht the Feder Reserve woud reduce interest
rtes in the ner future, which fueed  surge in US stock mrkets nd resuted in  .percent tot
return in .* Bond mrket performnce gener strugged for most of the er s interest rte
votiit persisted. At er-end, however, bond mrkets stged  strong comebck with tot returns
(cpit gins nd interest income) of .percent in November nd December one nd .percent for
the fu er.†
Long-Term Mutu Fund Fows
Athough net new csh ows into ong-term mutu funds re tpic correted with mrket returns,
the tend to be moderte s percentge of tot net ssets even during episodes of mrket turmoi.
Sever fctors m contribute to this phenomenon. For exmpe, househods (i.e., reti investors) own
the vst mjorit of US ong-term mutu fund net ssets (Figure .). Reti investors gener respond
ess strong to mrket events thn do institution investors. Most notb, househods often use mutu
funds to sve for the ong term, such s for coege or retirement. Mn of these investors mke stbe
contributions through periodic pro deductions, even during periods of mrket stress. In ddition, mn
mutu fund shrehoders seek the dvice of finnci dvisers, who m provide  steding inuence
during mrket downturns. These fctors re mpified b the fct tht net ssets in mutu funds re
spred cross miion investors who hve  wide vriet of individu chrcteristics (such s ge or
ppetite for risk) nd gos (such s sving for retirement, emergencies, or eduction). Investors re so
bound to hve  wide rnge of views on mrket conditions nd how best to respond to those conditions
to meet their individu gos. As  resut, even during months when funds s  whoe experience net
outows, mn investors continue to purchse fund shres.
* As mesured b the Wishire  Tot Mrket Index.
† As mesured b the S&P US Aggregte Bond Index.
 INVESTMENT COMPANY FACT BOOK
48
LEARN
MORE
Equit Mutu Funds
Equit mutu funds experienced net outows ever month in , toting $biion over the er or
.percent of er-end  tot net ssets (Figure .). In the first three months of the er, investors
hd redeemed, on net,  modest $biion from equit mutu funds. Fows to mutu funds, in gener,
tend to be bostered in the first qurter of the er becuse investors who receive er-end bonuses m
invest tht mone retive quick in the new er. In ddition, some investors wit to mke contributions
to their individu retirement ccounts (IRAs) before fiing their tx returns. As the er progressed, net
outows from equit mutu funds cceerted, with investors redeeming, on net, $biion from Apri
through December.
From December Outows to Jnur Inows: Seson Fctors in Mutu Fund Fows
www.ici.org/viewpoints/view__seson_nncf
FIGURE
3.4
Equit Mutu Funds Experienced Net Outows Throughout 
Billions of dollars; monthly, 2023
-100
-80
-60
-40
-20
0
20
DecNovOctSepAugJulJunMayAprMarFebJan
-30
-30
-33
-55
-43
-41
Total net new cash flow
Domestic equity mutual funds
World equity mutual funds
-47
-35
-22
-45
-59
-78
49
US MUTUAL FUNDS
Net outows from equit mutu funds in  were ike driven b continued investor demnd for equit
exchnge-trded funds (ETFs). As discussed in chpter , demnd for ETFs hs been ver strong over
the pst sever ers. Except for Februr, equit ETFs hd net cretions in ever month of , which
resuted in $biion in net shre issunce over the er (see Figure.). B contrst, equit mutu
funds hd net outows of $biion in  (Figure.).
Bond Mutu Funds
Bond mutu fund net new csh ows tpic re correted with the performnce of US bonds
(Figure.), which, in turn, is rge driven b the US interest rte environment. In , bond mutu funds
fced significnt interest rte votiit s ong-term interest rtes uctuted wide throughout the er
despite ending the er exct where the strted. The ied on the -er Tresur strted  t
.percent, dropped to s ow s .percent in er Apri foowing the region bnking crisis in Mrch,
but then reched .percent in October (its highest eve since mid-) before retreting to .percent
t er-end.
FIGURE
3.5
Net New Csh Fow to Bond Mutu Funds Is Tpic Reted to Bond Returns
Monthly
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
-20
-15
-10
-5
0
5
10
15
20
25
30
2023202220920620320020072004
Percentage of total net assets Percent
Net new csh ow
Tot return
2
Net new csh ow is reported s  percentge of previous month-end bond mutu fund tot net ssets, potted s  three-month
moving verge. Dt excude high-ied bond mutu funds.
The tot return on bonds is mesured s the er-over-er percent chnge in the FTSE US Brod Investment Grde Bond Index.
Sources: Investment Compn Institute, FTSE Russe, nd Refinitiv
 INVESTMENT COMPANY FACT BOOK
50
Txbe bond mutu funds experienced modest outows toting $biion in , or .percent of
their er-end  tot net ssets (Figure.). These net outows were fr ower thn the $biion in
outows in  which were ike prompted b the doube-digit osses seen in the bond mrket tht er.
In ddition to  shrp revers in the performnce of US bonds in , portfoio rebncing m hve
contributed to the significnt reduction in txbe bond mutu fund outows. With stocks significnt
outperforming bonds in , investors nd trget dte funds foowing sset oction strtegies woud
hve needed to bu bond funds nd se equit funds to remin t their trget octions. Nonetheess,
outows from bond mutu funds persisted, s investors m hve reocted some of their bond fund
hodings into mone mrket funds to reduce interest rte risk.
Most ctegories of txbe bond mutu funds experienced outows in , with high-ied bond
funds experiencing the buk of outows—$biion, which represented .percent of their er-end
 tot net ssets. Word bond funds, which tpic hod  mix of bonds denominted in US dors
nd foreign currencies, sw net outows of $biion (.percent); investment grde bond funds sw
net outows of $biion (.percent); nd government bond funds sw net outows of $biion
(.percent). B contrst, muti-sector bond funds sw inows of $biion (or .percent of their net
ssets t er-end ).
Municip bond mutu funds so experienced outows in , with net outows toting $biion
for the er, or .percent of their er-end  net ssets.
FIGURE
3.6
Net New Csh Fow to Bond Mutu Funds Fuctuted Throughout 
Billions of dollars; monthly, 2023
-50
-25
0
25
50
JanFeb MarApr MayJun JulAug SepOct Nov Dec
Total net new cash flow
Taxable bond mutual funds
Municipal bond mutual funds
18 18
-20
1
(
*
)
13
11
-2
-18
-36
-14
-10
(*) = inow or outow of ess thn $ miion
51
US MUTUAL FUNDS
How Bond Mutu Funds Mnge Investor Fows
When meeting redemptions, fund mngers’ ctions re guided b mrket conditions, expected
investor ows, nd other fctors. A fund might decide to se some of its hodings to rise the csh
needed to fufi redemptions. But its choice of which prticur securities to se m depend
on mrket conditions. For exmpe, during  mrket downturn, with iquidit t  premium, some
fund mngers might seek to dd shrehoder vue b seing some of their funds’ more-iquid
bonds (which, being in high demnd, re trding t  premium to fundment vue). Other fund
mngers m concude tht it is necessr nd pproprite to se  representtive “sice” of
their funds’ entire portfoios.
Bond mutu fund mngers hve other ws of meeting redemption requests. For exmpe, 
fund might red hve csh on hnd. Or, the fund m use the csh tht bond mutu funds
receive ech d in the form of interest income from bonds hed in the portfoio, proceeds from
mtured bonds, or new ses of fund shres.
In ddition, bond funds often use derivtives or hod iquid ssets other thn csh. For exmpe,
 high-ied bond fund might hod some portion of its ssets in equities becuse equities re ver
iquid nd the return profies of high-ied bonds nd equities cn be simir. Derivtives cn be
more iquid thn their phsic counterprts, nd funds re required to segregteiquid ssets
to support their derivtives positions. As these positions re cosed, this csh coter provides
 red source of iquidit to meet redemptions. This is especi true for mn of the funds
common ced iquid terntive funds, s these funds re expicit designed to ow frequent
investor trding nd do so in rge mesure through the use of derivtives.
 INVESTMENT COMPANY FACT BOOK
52
Long-Term Demnd for Bond Mutu Funds
Despite outows in , bond mutu funds hve received $.triion in net new csh ow nd
reinvested dividends in the pst decde (Figure .).
A number of fctors hve heped contribute to this ong-term demnd for bond mutu funds, incuding
demogrphics. Oder investors tend to hve rger ccount bnces becuse the hve hd more time
to ccumute svings nd tke dvntge of compounding. At the sme time, s investors ge, the
tend to shift towrd fixed-income products. Over the pst decde, the ging US popution hs boosted
ows to bond funds.
The popurit of trget dte mutu funds hs so contributed to strong demnd for bond mutu funds
during this period. Trget dte funds invest in  chnging mix of equities nd fixed-income investments.
As the fund pproches nd psses its trget dte (which is usu specified in the fund’s nme), the
fund grdu reoctes ssets from equities to fixed-income investments, incuding bonds. Over the
pst  ers, trget dte mutu funds hve received net inows of $biion. B er-end ,
trget dte mutu funds hd tot net ssets of $.triion. Investor interest in these funds ike reects
their utomtic rebncing fetures s we s their incusion s n investment option in mn defined
contribution (DC) pns (see Figure.).
FIGURE
3.7
Bond Mutu Funds Hve Experienced Net Inows Through Most of the Pst Decde
Cumulative ows to bond mutual funds, billions of dollars, monthly
0
500
1,000
1,500
2,000
2,500
2023202220212020201920182017201620152014
Note: Bond mutu fund dt incude net new csh ow nd reinvested dividends.
53
US MUTUAL FUNDS
FIGURE
3.8
Index Mutu Funds Sw Net Inows in 
Billions of dollars, annual
-200
-150
-100
-50
0
50
100
150
200
250
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total net new cash flow
Index bond mutual funds and index hybrid mutual funds
Index world equity mutual funds
Index domestic equity mutual funds
150
167
199
224
157
135
-95
49
37
26
These ong-term fctors, combined with most positive nnu returns on bonds nd inows from portfoio
oction strtegies, hve cused bond mutu fund tot net ssets to increse from $.triion t er-
end  to $.triion t er-end . However, ong-term mutu funds’ shre of US bond mrkets—
most of which is hed b bond mutu funds—hs sted retive stbe in recent ers (see Figure .).
Growth of Other Investment Products
Outows from some ong-term mutu funds over the pst decde reect  broder shift, driven b both
investors nd retirement pn sponsors, towrd other pooed investment vehices. This trend is reected
in the outows from ctive mnged mutu funds nd the growth of index mutu funds, ETFs, nd
coective investment trusts (CITs) since .
Index mutu funds—which hod  (or  representtive smpe) of the securities in  specified index—
re popur mong investors. Of househods tht owned mutu funds, percent owned t est one
index equit mutu fund in . As of er-end ,  index mutu funds mnged tot net ssets
of $.triion. For  s  whoe, investors dded $biion in net new csh ow to these funds
(Figure.). Outows from index domestic equit mutu funds ($biion) were more thn oset b
inows into index bond nd hbrid mutu funds nd index word equit mutu funds ($biion nd
$biion, respective).
 INVESTMENT COMPANY FACT BOOK
54
Index domestic equit mutu funds nd ETFs hve prticur benefited from the over increse in
investor demnd for index-bsed investment products. From  through , index domestic equit
mutu funds nd ETFs received $.triion in net new csh nd reinvested dividends, whie ctive
mnged domestic equit mutu funds experienced net outows of $.triion (incuding reinvested
dividends) (Figure.). Index domestic equit ETFs hve grown rpid—ttrcting more thn three
times the mount of net inows of index domestic equit mutu funds since . Prt of the incresing
popurit of ETFs in the pst decde is ttributbe to more brokers nd finnci dvisers using them
in their cients’ portfoios. In , fu-service brokers nd fee-bsed dvisers hd percent nd
percent, respective, of their cients’ househod ssets invested in ETFs, up shrp from percent nd
percent in  (Figure.).
FIGURE
3.9
Some of the Outows from Domestic Equit Mutu Funds Hve Gone to ETFs
Cumulative ows to domestic equity mutual funds and net share issuance of domestic equity ETFs,
billions of dollars, monthly
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
ctive mnged domestic equit mutu funds
Index domestic equit ETFs
Index domestic equit mutu funds
Activemnged domestic equit ETFs
Note: Mutu fund dt incude net new csh ow nd reinvested dividends; ETF dt for net shre issunce incude reinvested
dividends.
55
US MUTUAL FUNDS
FIGURE
3.10
Fee-Bsed Advisers Are Investing Lrger Portions of Cient Portfoios in ETFs
Percentage of household assets invested in investment category by adviser type
ETFsVariable annuitiesMutual fundsETFsVariable annuitiesMutual funds
2012
2022
Full-service brokers
1
Fee-based advisers
2, 3
6
22
72
32
11
57
14
6
80
45
6
49
This ctegor incudes wirehouses s we s region, independent, nd bnk broker-deers.
This ctegor incudes registered investment dvisers nd du registered investment dviser broker-deers.
This ctegor excudes n unknown portion of ssets from investors who received fee-bsed dvice but impemented trdes themseves
through discount brokers nd fund supermrkets.
Note: In this figure, househod ssets incude househod hodings of mutu funds, vribe nnuities, nd ETFs.
Source: Cerui Assocites, “The Stte of US Reti nd Institution Asset Mngement, ”
 INVESTMENT COMPANY FACT BOOK
56
CITs re n terntive to mutu funds for DC pns. Like mutu funds, CITs poo the ssets of investors
nd (either ctive or pssive) invest those ssets ccording to  prticur strteg. Much ike
institution shre csses of mutu funds, CITs gener require substnti minimum investment
threshods, which cn imit the costs of mnging pooed investment products. Unike mutu funds, which
re reguted under the Investment Compn Act of , CITs re reguted under bnking ws nd re
not mrketed s wide s mutu funds; this cn so reduce their opertion nd compince costs s
compred with mutu funds.
More retirement pn sponsors hve begun oering CITs s options in (k) pn ineups. As Figure.
demonstrtes, this trend hs trnsted into  growing shre of ssets hed in CITs b rge (k) pns.
Tht shre incresed from percent in  to n estimted percent in . This recent expnsion is
due, in prt, to the growth in trget dte CITs.
FIGURE
3.11
Assets of Lrge (k) Pns Are Incresing Hed in Coective Investment Trusts
Percentage of assets in large 401(k) plans*
2022202120202015201020052000
17
12
9
6
32
28
30
* Lrge (k) pns re those tht fied Form  Schedue H (tpic pns with  prticipnts or more).
Note: Assets excude Direct Fiing Entit ssets tht re reinvested in coective investment trusts. Dt prior to  come from
theForm  Reserch dt sets reesed b the Deprtment of Lbor. Dt for  re preiminr, bsed on Deprtment of
Lbor Form  test dt sets.
Source: Investment Compn Institute ccutions of Deprtment of Lbor Form  dt
57
US MUTUAL FUNDS
Mone Mrket Funds
In , mone mrket funds sw substnti inows of $biion— significnt revers from outows
of $biion in  (Figure .). Government mone mrket funds experiencing the buk of inows
($biion), whie prime mone mrket funds nd tx-exempt mone mrket funds sw inows of
$biion nd $biion, respective.
Robust demnd for mone mrket funds ws prticur pronounced in Mrch , when investors
rushed to these funds in response to the region bnking crisis, which begn with the fiure of Siicon
Ve Bnk. Mone mrket funds continued to experience strong demnd t vrious times during the rest
of the er. Investors were drwn to the eevted mrket ieds nd ow interest rte risk tht these funds
oered, especi in ight of persistent high interest rte votiit in the bond mrkets during this time.
To mnge interest rte risk nd shorten the durtion of their fixed-income investments, some investors
m hve strtegic reocted  portion of their bond fund investments into mone mrket funds.
FIGURE
3.12
Mone Mrket Funds Experienced Strong Demnd in 
Billions of dollars; monthly, 2023
19
49
358
-5
158
14 15
110
52
-31
195
21
Total net new cash flow
Government money market funds
Tax-exempt money market funds
Prime money market funds
400
300
200
100
0
-100
JanFeb MarApr MayJun JulAug SepOct Nov Dec
CHAPTER
US Exchange-Traded
Funds
ETFs re  convenient, cost-eective too for investors seeking to gin or shed
exposure to brod mrkets, prticur sectors or geogrphic regions, or specific
investment strtegies. Demnd for ETFs hs grown mrked s investors—both
institution nd reti—incresing turn to them s investment options.
In the pst  ers, net shre issunce of ETFs hs toted $. triion.
As investor demnd hs incresed, sponsors hve oered more ETFs
with  greter vriet of investment objectives. With $. triion in tot
net ssets t er-end , the US ETF industr remined the rgest
intheword.
IN THIS CHAPTER
 Wht Is n ETF?
 ETF Tot Net Assets
 Demnd for ETFs
 Chrcteristics of ETF-Owning Househods
CHAPTER 
 INVESTMENT COMPANY FACT BOOK
58
4
59
US EXCHANGETRADED FUNDS
Wht Is n ETF?
An exchnge-trded fund (ETF) is  pooed investment vehice with shres tht investors cn bu nd
se throughout the d on  stock exchnge t  mrket-determined price. Investors m bu or se ETF
shres through  broker or in  brokerge ccount just s the woud the shres of n pubic trded
compn. ETFs hve been vibe s n investment product for  ers in the United Sttes. Most ETFs
re structured s open-end investment compnies (ike mutu funds) or unit investment trusts (UITs) nd
re governed b the sme regutions. Other ETFs—primri those investing in commodities, currencies,
nd futures—hve dierent structures nd re subject to dierent regutor requirements.
ETF Tot Net Assets
At er-end , the US ETF mrket—with , funds nd $. triion in tot net ssets—remined the
rgest in the word, ccounting for  percent of the $. triion in ETF net ssets wordwide.
*
Within
the United Sttes, tot net ssets in ETFs ccounted for  percent of ssets mnged b investment
compnies t er-end  (see Figure .). ETFs hve been vibe for  ers, nd throughout tht
time, rge-cp domestic equit ETFs hve ccounted for  substnti proportion of ETF net ssets. At
er-end , net ssets in rge-cp domestic equit ETFs toted $. triion, or  percent of ETF net
ssets (Figure .). Bond ETFs, which hve been fueed b strong investor demnd over the pst sever
ers, ccounted for $. triion ( percent) of ETF net ssets.
* Bsed on ICI ccutions of dt from the Interntion Investment Funds Assocition (IIFA).
Lern More About ETFs
ETFs hve proven to be  successfu finnci innovtion mong registered investment compnies
since the first one ws creted in . The demnd for ETFs hs grown mrked s both
institution nd reti investors hve grvitted towrd them becuse of their ppeing fetures.
For n introduction to the cretion, opertion, nd evoution of the regution of ETFs, s we s
informtion bout uthorized prticipnts (APs) nd the ke simirities nd dierences between
ETFs nd mutu funds, see the ETF resource center, vibe t www.ici.org/etf.
 INVESTMENT COMPANY FACT BOOK
60
FIGURE
4.1
Tot Net Assets nd Number of ETFs Rose in 
Billions of dollars, year-end
20232022202120202015201020052000
2,101
992
301
66
Large-cap domestic equity
Other domestic equity
Global/International equity
Bond
Hybrid and commodity*
Number of ETFs
20480 9231,597 2,2032,570 3,1082,847
5,449
7,191
8,085
6,477
568
664
475
340
1,564
1,617
1,030
1,054
2,250
2,270
1,262
1,228
2,704
2,396
1,321
1,496
1,930
2,011
1,106
1,263
53
185
181168
169
* Commodit ETFs incude funds—both registered nd not registered under the Investment Compn Act of —tht invest primri in
commodities, currencies, nd futures.
Note: The first bond, hbrid, nd commodit ETFs were opened in , , nd , respective.
61
US EXCHANGETRADED FUNDS
Secondr Mrket Trding in ETF Shres
Mn investors ccess ETFs through the secondr mrket (e.g., on n exchnge). Athough mn rge
institution investors cn ccess ETFs in both the primr mrket (i.e., through cretions nd redemptions
of ETF shres vi n AP) nd the secondr mrket, reti investors gener cn ccess them on in the
secondr mrket. ETF investors trding in the secondr mrket gener re not motivted b rbitrge.
The re using ETFs to gin or reduce exposure to specific sset csses or investment strtegies, diversif
their portfoios, or hedge investment risks. Thus, these funds provide investors with n ecient mens
to trnsfer risk. Therefore, it is not surprising tht ETF secondr mrket trding voumes (s mesured
b the vue of shres trded) re  substnti shre of tot trding on US stock exchnges nd other
venues. But despite tremendous growth in ETFs in the pst decde, their verge di shre of tot stock
mrket trding hd remined retive t (Figure .). In , ETFs’ shre of trding voume somewht
incresed to  percent, which ws ike reted to eevted mrket votiit. This shre decresed to
percent in  s mrket votiit bted.
During periods of mrket turbuence, ETF secondr mrket trding voumes rise—both in bsoute terms
nd s  shre of tot stock mrket trding—s investors, especi institution investors, turn to ETFs
to quick nd ecient trnsfer nd hedge risks. For exmpe, in te , stock mrket votiit
jumped, rge reecting mrket prticipnts’ concerns bout sowing gob growth nd intensifing
trde tensions. On December , , when the S&P  index nered ber mrket territor foowing its
September pek, ETF trding voume ccounted for  percent of tot stock mrket trding—its highest
shre in the pst decde (Figure .). More recent, the region bnking crisis in Mrch  strined
finnci mrkets. During this period, ETF trding voumes’ shre of tot stock mrket trding rose, peking
t  percent on Mrch , , the d Siicon Ve Bnk ws shut down nd pced under Feder
Deposit Insurnce Corportion (FDIC) receivership (the first of sever region bnks).
 INVESTMENT COMPANY FACT BOOK
62
FIGURE
4.2
ETF Secondr Mrket Trding Averged  Percent of Di US Stock Trding in 
Percentage of total US stock market trading volume, annual
0
5
10
15
20
25
30
35
40
45
50
Minimum daily ETF share for the year
Average daily ETF share of total US stock market trading
Maximum daily ETF share for the year
2023202220212020201920182017201620152014
36
40
36
43
35
36
3838
40
25
26
27
27
25
27
26
25
30
4
4
22
5
8
6
6
20
7
4
20
Date of maximum
Jun Mr Nov Aug Feb  Dec Sep  Dec Jn Mr 
Date of minimum
Jun  Dec Sep Jun  Jun Jun Ju Jun  Nov  Dec 
32
Sources: Investment Compn Institute, Boomberg, Refinitiv, nd Cboe Exchnge, Inc.
63
US EXCHANGETRADED FUNDS
Across  ETFs, most ctivit is conducted in the secondr mrket (trding ETF shres) rther thn the
primr mrket (cretions nd redemptions of ETF shres through n AP). On verge,  percent of the
tot ctivit in ETFs occurred on the secondr mrket in . Even for ETFs focused on nrrower sset
csses—such s emerging mrket equit, domestic high-ied bond, nd emerging mrket bond—the buk
of the trding occurred on the secondr mrket ( percent, percent, nd  percent, respective).
*
Most ETF secondr mrket trdes represent investors exchnging shres of ETFs mong themseves.
Unike primr mrket ctivit, these trdes do not ect the ETF’s undering securities. In , domestic
equit ETFs hd  tot of $. triion in primr mrket ctivit, which represented on . percent of the
$. triion trded in compn stocks during the er (Figure .). Even in ers with significnt mrket
votiit, such s , , nd , cretions nd redemptions of domestic equit ETFs ccounted for
on  modest shre of trding in compn stocks.
* Bsed on ICI ccutions of dt from ICI nd Refinitiv.
FIGURE
4.3
Domestic Equit ETFs Hve Hd Minim Impct on Undering US Stocks
Annual
Domestic equit ETF
primr mrket ctivit*
Triions of dors
Vue of compn
stock trded
Triions of dors
Domestic equit ETF
primr mrket ctivit
s  shre of compn
stock trded
Percent
 $. $. .%
 . . .
 . . .
 . . .
 . . .
 . . .
 . . .
 . . .
 . . .
 . . .
* Primr mrket ctivit is mesured s the tot of gross issunce nd gross redemptions.
Sources: Investment Compn Institute, Boomberg, Refinitiv, nd Cboe Exchnge, Inc.
 INVESTMENT COMPANY FACT BOOK
64
Demnd for ETFs
In recent ers, demnd for ETFs hs grown s institution investors hve found ETFs to be  convenient
vehice for prticipting in, or hedging ginst, brod movements in the stock mrket nd finnci dvisers
hve invested more of their reti cients’ ssets in ETFs (see Figure .). Net issunce of ETFshres
(incuding reinvested dividends) ws $ biion in  compred with $ biion in  (Figure.).
FIGURE
4.4
Net Shre Issunce of ETFs Decined Sight in 
Billions of dollars, annual
0
200
400
600
800
1,000
-100
100
300
500
700
900
202320222021202020192018
All ETFs
Large-cap domestic equity
Other domestic equity
Global/International equity
Bond
Hybrid and commodity*
935
609
501
323
311
597
* Commodit ETFs incude funds—both registered nd not registered under the Investment Compn Act of —tht invest primri in
commodities, currencies, nd futures.
Note: Dt for net shre issunce incude reinvested dividends.
65
US EXCHANGETRADED FUNDS
In , net issunce of domestic equit ETFs ws $ biion, nd net issunce of gob/interntion
equit ETFs ws $ biion. The higher demnd for domestic equit ETFs ike reected the stronger
performnce of US stocks in  ( percent
*
) compred with interntion stocks ( percent
†
).
Despite gins of  percent (incuding interest income) on US bonds in 
‡
— shrp revers from the
osses of  percent in —demnd for bond ETFs remined fir sted, with net issunce toting
$ biion in  versus $ biion in . In , net issunce of bond ETFs ws concentrted in
intermedite-durtion funds—n estimted percent of the bond ETF net issunce went to funds with
durtions between four nd eight ers.
§
In recent ers, some of the net shre issunce represents mutu funds converting to ETFs. From the
beginning of  through ,  mutu funds, which hed $. biion in tot net ssets t the time of
conversion, hve converted to ETFs. These conversions represented on . percent of ETFs’ net issunce
($. triion) over the sme period.
Strong investor demnd for ETFs hs ed to  substnti increse in the number of ETFs creted b
fund sponsors, with , new ETFs oered to investors in the pst decde (Figure .). Over the sme
period, ,ETFs were iquidted or merged with nother fund. In n given er, fund sponsors wi
iquidte or merge ETFs tht hve fied to ttrct sucient demnd. In , ETFs—most equit
ETFs—were unched. Menwhie,  ETFs wereiquidted or merged s sponsors eiminted some
gob/interntion equit ETFs nd sector equit ETFs from their ineups.
* As mesured b the Wishire  Index.
† As mesured b the MSCI ACWI Ex USA Index (expressed in US dors).
‡ As mesured b the S&P US Aggregte Bond Index.
§
Bsed on ICI ccutions of dt from Morningstr Direct.
FIGURE
4.5
Number of ETFs Entering nd Exiting the Industr
2023202220212020201920182017201620152014
Opened
Liquidated/Merged
84
114
97
75
59
194
120
59
182
242
235
110
258
231
275
198
518
414
458
323
Note: Dt incude ETFs tht invest primri in other ETFs.
 INVESTMENT COMPANY FACT BOOK
66
Chrcteristics of ETF-Owning Househods
About  percent of US househods (.miion) hed ETFs in  (see Figure.). Of househods tht
owned mutu funds, percent so owned ETFs. ETF-owning househods tended to incude investors
who owned  rnge of equit nd fixed-income investments.
Some chrcteristics of ETF-owning househods re simir to those of househods tht own mutu
funds nd those tht own stocks direct. For instnce, househods tht owned ETFs—ike househods
owning mutu funds nd those owning individu stocks—tended to hve househod incomes bove the
ntion medin (Figure.).
ETF-owning househods so exhibit certin chrcteristics tht distinguish them from other househods.
For exmpe, ETF-owning househods tended to be more ike to own individu retirement ccounts
(IRAs) thn househods tht own mutu funds or those tht own individu stocks. Addition,
Miennis nd Genertion Z represented  rger shre of ETF-owning househods (percent) thn
mutu fund–owning househods ( percent).
ETF-owning househods so indicted the were more wiing to tke investment risk. In ,
percent of ETF-owning househods were wiing to tke substnti or bove-verge investment
risk compred with percent of  US househods nd percent of mutu fund–owning househods
(Figure.). This resut igns with the predominnce of equit ETFs, which mke up percent of
ETF tot net ssets. Investors who re more wiing to tke investment risk re more ike to invest in
equities. Indeed, percent of ETF-owning househods owned equit ETFs compred with percent of
mutu fund–owning househods owning equit mutu funds.
In , the vst mjorit of ETF-owning househods reported tht the invest in ETFs for diversifiction
nd their cost-eectiveness. Aso,  percent of ETF-owning househods indicted tht the invest in
ETFs to sve for retirement (compred with  percent of househods owning mutu funds tht indicted
the use mutu funds to sve for retirement).
67
US EXCHANGETRADED FUNDS
FIGURE
4.6
Chrcteristics of ETF-Owning Househods
2023
A US
househods
Househods
owning
ETFs
Househods
owning
mutu funds
Househods
owning
individu
stocks
Medin
Age of househod surve respondent    
Househod income
$, $, $, $,
Househod finnci ssets
$, $, $, $,
Percentge of househods
Househod surve respondent
Mrried or iving with  prtner    
Coege or postgrdute degree    
Empoed (fu- or prt-time)
   
Retired from ifetime occuption    
Househod owns
IRA(s)    
DC retirement pn ccount(s)    
Househod’s wiingness to tke finnci risk
Substnti risk for substnti gin
Above-verge risk for bove-verge gin    
Averge risk for verge gin    
Beow-verge risk for beow-verge gin   
Unwiing to tke n risk 
Tot reported is househod income before txes in .
Househod finnci ssets incude ssets in empoer-sponsored retirement pns but excude the househod’s primr residence.
CHAPTER
US Closed-End Funds
There re four tpes of cosed-end funds (CEFs): trdition funds, interv funds, tender
oer funds, nd business deveopment compnies (BDCs). Trdition CEFs (nd some
interv funds nd BDCs) issue  fixed number of shres tht re isted on  stock
exchnge or trded in the over-the-counter mrket. Other CEFs—ike most interv
funds,tender oer funds, nd BDCs—re not isted on stock exchnges nd re
permitted to continuous oer their shres t net sset vue. The ssets of
 CEF re profession mnged in ccordnce with the fund’s investment
objectives nd poicies nd m be invested in stocks, bonds, nd other
securities. Since most CEFs do not need to mintin csh reserves or se
securities to meet redemptions, the m fu invest to their strtegies
nd invest in ess-iquid portfoio securities. Tot ssets of trdition CEFs
were $ biion t er-end , whie tot ssets of interv funds,
tenderoer funds, nd BDCs were $ biion.
IN THIS CHAPTER
 Wht Is  Cosed-End Fund?
 Trdition CEFs
 Interv Funds, Tender Oer Funds, nd Business Deveopment Compnies
 Chrcteristics of Househods Owning CEFs
CHAPTER 
 INVESTMENT COMPANY FACT BOOK
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69
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Wht Is  Cosed-End Fund?
Cosed-end funds (CEFs) re one of four min tpes of investment compnies, ong with mutu funds,
exchnge-trded funds (ETFs), nd unit investment trusts (UITs). Historic, the vst mjorit of CEFs hve
been “isted” CEFs—investment compnies tht issue  fixed number of common shres in n initi pubic
oering (IPO) tht re pubic trded on n exchnge or in the over-the-counter mrket, ike trdition
stocks. Once issued, shrehoders m not redeem those shres direct to the fund (though some CEFs
m repurchse shres through stock repurchse progrms or through  tender for shres). Subsequent
issunce of common shres gener on occurs through secondr or foow-on oerings, t-the-mrket
oerings, rights oerings, or dividend reinvestments. Listed CEFs primri incude trdition funds but
m so incude interv funds nd business deveopment compnies (BDCs) tht re isted on exchnges.
There re so “unisted” CEFs, which hve recent seen sted sset growth. Unisted CEFs re not isted
on n exchnge but sod pubic to reti investors, min through intermediries, or to certin quified
investors through privte pcement oerings. Unike isted CEFs, unisted CEFs do not issue  fixed
number of shres but re permitted to continuous oer their shres t net sset vue (NAV) foowing
their IPO. As the re not trded on n exchnge, unisted CEFs engge in schedued repurchses or
tender oers for  certinpercentge of the CEF’s shres to ow shrehoders to exit the fund. The biit
of  shrehoder to exit the CEF is dependent on the timing of the schedued repurchse or tender oer
nd whether the repurchse or tender is “over-subscribed.” Unisted CEFs incude tender oer funds, most
interv funds, nd BDCs.
A CEF’s ssets re profession mnged in ccordnce with the fund’s investment objectives nd
poicies nd m be invested in stocks, bonds, nd other ssets. Becuse CEFs do not fce di
redemptions, there is itte need to mintin csh reserves nd the cn tpic be fu invested
ccording to their strtegies. Aso, other thn for n upcoming repurchse or tender oer, CEFs do not
se securities di nd hve the exibiit to invest in ess-iquid portfoio securities. For exmpe, CEF
m invest in securities of ver sm compnies, municip bonds tht re not wide trded, or securities
trded in countries tht do not hve fu deveoped securities mrkets.
CEFs so re permitted to issue one css of preferred shres in ddition to common shres. Hoders
of preferred shres re pid dividends but do not prticipte in the gins nd osses on the fund’s
investments. Issuing preferred shres ows  CEF to rise ddition cpit, which it cn use to purchse
more ssets for its portfoio.
Cosed-End Fund Resource Center
www.ici.org/cef
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FIGURE
5.1
Tot Assets of Trdition CEFs Hve Stgnted in Recent Yers nd the
Number of Trdition CEFs Hs Significnt Decresed
Billions of dollars, year-end
Bond
Equit
Number of CEFs
Bond
Equity
249250
275
277
303
245
427


448


480


487


495


402


202320222022020209208
99
150
159
91
107
168
172
106
123
180
148
98
Note: Total assets is the fir vue of ssets hed in CEF portfoios funded b common nd preferred shres ess n ibiities (not
incuding ibiities ttributed to preferred shres).
Source: ICI Research Perspective, “The Cosed-End Fund Mrket, ”
Trdition CEFs
Trdition CEFs issue  fixed number of shres during n IPO tht re then isted on n exchnge or
trded in the over-the-counter mrket where investors bu nd se them in the open mrket (i.e., 
trdition CEFs re isted CEFs). The mrket price of  trdition CEF uctutes ike tht of other pubic
trded securities nd is determined b supp nd demnd in the mrketpce.
Tot Assets nd Net Issunce of Trdition CEFs
At er-end , there were  trdition CEFs with tot ssets of $ biion (Figure.). The modest
increse in CEF ssets in  reected mrket returns. At er-end , bond CEFs ccounted for the
mjorit of trdition CEF ssets (percent) with the reminder hed b equit CEFs.
The number of trdition CEFs vibe to investors decresed gin in  (Figure.). In recent ers,
more trdition CEFs were iquidted, merged, or converted into open-end mutu funds or ETFs thn
were unched.
The Cosed-End Fund Mrket, 
www.ici.org/files/2024/per30-05.pdf
71
US CLOSEDEND FUNDS
FIGURE
5.2
Trdition CEF Net Shre Issunce Remined Negtive in 
Millions of dollars, annual
-5,000
0
5,000
10,000
15,000
20,000
202320222021202020192018
16,735
2,815
5,392
1,869
-890
-524
Total net share issuance
Bond
Equity
Note: Net shre issunce is the dor vue of gross issunce (proceeds from initi nd ddition pubic oerings of shres) minus
gross redemptions of shres (shre repurchses nd fund iquidtions).
Source: ICI Research Perspective, “The Cosed-End Fund Mrket, ”
Trdition CEFs hd negtive net shre issunce of $ miion in , which foows negtive net
issunce of $ miion in  (Figure .). In , equit CEFs hd positive net issunce of $ miion,
whie bond CEFs hd negtive net issunce of $ miion. Positive returns on stocks nd bonds round
the word were not enough to boster demnd for trdition CEFs in — er without n new
trdition CEFs entering the mrket.
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Trdition CEF Distributions
In , trdition CEFs distributed n estimted $. biion to shrehoders (Figure.). CEFs m
mke distributions to shrehoders from three possibe sources: income distributions, which re pments
from interest nd dividends tht the fund erns on its investments in securities; reized cpit gins
distributions; nd return of cpit. Income distributions ccounted for the mjorit (percent) of CEF
distributions. Cpit gins distributions ccounted for percent of CEF distributions nd return of cpit
for percent.
Frequent Asked Questions About Cosed-End Funds nd Their Use of Leverge
www.ici.org/faqs/faq/other/faqs_closed_end
FIGURE
5.3
Income Distributions Represent Buk of Tot Trdition CEF Distributions
Percentage of traditional CEF distributions, 2023
20%
Return of capital
67%
Income distributions*
13%
Capital gains distributions
Total traditional CEF distributions: $16.3 billion
* Income distributions re pid from interest nd dividends tht the fund erns on its investments in securities.
Source: ICI Research Perspective, “The Cosed-End Fund Mrket, ”
73
US CLOSEDEND FUNDS
Trdition CEF Leverge
CEFs hve the biit—subject to strict regutor imits—to use everge s prt of their investment strteg. The
use of everge b  CEF cn ow it to chieve higher ong-term returns but so increses risk nd the ikeihood
of shre price votiit. CEF everge cn be cssified s either structur everge or portfoio everge. At er-
end ,  trdition CEFs, ccounting for percent of the tot, used structur everge, some tpes of
portfoio everge (i.e., tender option bonds or reverse repurchse greements), or both s  prt of their investment
strteg (Figure.).
FIGURE
5.4
Trdition CEFs Are Empoing Structur Leverge nd Some Tpes of
Portfoio Leverge
Number of traditional CEFs, year-end
Total
1
Structural
2
Portfolio
3
2023202220212020
266
145
240
122
237
114
217
108
304
272
267
249
Components do not dd to the tot becuse CEFs m empo both structur nd portfoio everge.
Structur everge ects the CEF’s cpit structure b incresing the fund’s portfoio ssets through borrowing nd issuing debt nd
preferred shres.
Portfoio everge is everge tht resuts from prticur tpes of portfoio investments, incuding certin tpes of derivtives, reverse
repurchse greements, tender option bonds, nd other investments or tpes of trnsctions. Dt re on vibe for reverse
repurchse greements nd tender option bonds. Given dt coection constrints, nd the continuing deveopment of tpes of
investments/trnsctions with  everge chrcteristic (nd the use of dierent definitions of leverage), ctu portfoio everge m
be mteri dierent from wht is reected bove.
Source: ICI Research Perspective, “The Cosed-End Fund Mrket, ”
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Structur everge ects the CEF’s cpit structure b incresing the fund’s portfoio ssets. Tpes
of CEF structur everge incude borrowing cpit nd issuing debt nd preferred shres. At the end
of ,  trdition CEFs hd  tot of $. biion in structur everge, with $. biion from
preferred shres nd $. biion from other structur everge, which incudes bnk borrowing nd other
forms of debt (Figures . nd .). The verge everge rtio* cross those trdition CEFs empoing
structur everge ws percent t er-end . Among CEFs empoing structur everge,
the verge everge rtio for bond funds ws somewht higher (percent) thn tht of equit funds
(percent).
Portfoio everge is everge tht resuts from prticur portfoio investments, such s certin
tpes of derivtives, reverse repurchse greements, nd tender option bonds. At the end of ,
trdition CEFs hd $ biion outstnding in reverse repurchse greements nd tender option
bonds (Figures . nd .).
* The leverage ratio is the rtio of the mount of structur everge to the sum of the mount of common shre ssets nd structur
everge.
FIGURE
5.5
Mjorit of Trdition CEF Leverge Is from Preferred Shres
Billions of dollars, 2023
Tender option
bonds
Reverse repurchase
agreements
Preferred
shares
1
8.5
6.4
19.5
27.2
Other structural
leverage
2
Structural leveragePortfolio leverage
3
A CEF m issue preferred shres to rise ddition cpit, which cn be used to purchse more securities for its portfoio. Hoders of
preferred shres re pid dividends, but do not prticipte in the gins nd osses on the fund’s investments.
Other structural leverage incudes bnk borrowing nd other forms of debt.
Portfoio everge is everge tht resuts from prticur tpes of portfoio investments, incuding certin tpes of derivtives, reverse
repurchse greements, tender option bonds, nd other investments or tpes of trnsctions. Dt re on vibe for reverse
repurchse greements nd tender option bonds. Given dt coection constrints nd the continuing deveopment of tpes of
investments/trnsctions with  everge chrcteristic (nd the use of dierent definitions of leverage), ctu portfoio everge m
be mteri dierent from wht is reected bove.
Source: ICI Research Perspective, “The Cosed-End Fund Mrket, ”
75
US CLOSEDEND FUNDS
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Secondr Mrket Trding of Trdition CEFs
More thn percent of trdition CEFs ccute the vue of their portfoios ever business d, whie
the rest ccute their portfoio vues week or on some other bsis. The NAV of  CEF is ccuted b
subtrcting the fund’s ibiities (e.g., fund borrowing) from the current mrket vue of its ssets nd dividing
b the tot number of shres outstnding. The NAV chnges s the tot vue of the undering portfoio
securities rises or fs, or the fund’s ibiities chnge.
Becuse  trdition CEF’s shres trde bsed on investor demnd, the fund m trde t  price higher
or ower thn its NAV. A CEF trding t  shre price higher thn its NAV is sid to be trding t “premium”
to the NAV, whie  CEF trding t  shre price ower thn its NAV is sid to be trding t  “discount.”
Funds m trde t premiums or discounts to the NAV for  number of potenti resons, such s mrket
perceptions or investor sentiment. For exmpe,  CEF tht invests in securities tht re nticipted to
generte bove-verge future returns nd re dicut for reti investors to obtin direct m trde t 
premium becuse of  high eve of mrket interest. B contrst,  CEF with rge unreized cpit gins
m trde t  discount becuse investors wi hve priced in n perceived tx ibiit.
CEF price devitions widened somewht in —equit fund discounts widened from . percent t
er-end  to . percent t er-end  nd bond fund discounts widened from . percent to
.percent over the sme period. Gener, the mjorit of CEFs trde t  discount in n given month.
Cosed-End Fund Activism
www.ici.org/fies/cef-ctivism.pdf
FIGURE
5.6
Trdition CEF Discounts Widened in 
Percent, month-end
-20
-15
-10
-5
0
5
ʼ23ʼ22ʼ21ʼ20ʼ19ʼ18ʼ17ʼ16ʼ15ʼ14ʼ13ʼ12ʼ11ʼ10ʼ09ʼ08ʼ07ʼ06ʼ05
Bond CEFs
Equity CEFs
Note: The premium/discount rte is the simpe verge of the percent dierence between shre price nd NAV t month-end.
Source: Investment Compn Institute ccutions of dt from Boomberg nd Refinitiv
 INVESTMENT COMPANY FACT BOOK
76
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A Guide to Cosed-End Funds
www.ici.org/cef/background/bro_g2_ce
Interv Funds, Tender Oer Funds, nd Business Deveopment
Compnies
In ddition to trdition CEFs, there re three other tpes of CEFs—interv funds, tender oer funds, nd
business deveopment compnies (BDCs). At er-end , there were  interv funds, tender oer
funds, nd BDCs with tot ssets of $ biion (Figure.).
FIGURE
5.7
Interv Funds, Tender Oer Funds, nd BDCs Hve Fourished in Recent Yers
Year-end
1
BDCs
2
Tender oer funds
Interval funds
20232022202120202023202220212020
Total assets
Billions of dollars
Number of funds
65
78
95
238
69
80
106
255
81
92
120
293
92
98
132
322
$39
$34
$67
$139
$56
$44
$98
$198
$65
$49
$124
$238
$77
$60
$159
$296
Dt re bsed on qurter pubic fiings between November nd Jnur.
Tot ssets of BDCs re tot net ssets.
Note: Dt for number of funds excude feeder funds. Dt incude funds tht do not report sttistic informtion to the Investment
Compn Institute.
Source: Investment Compn Institute ccutions of dt from pubic vibe SEC Form N-PORT, N-CEN, -Q, nd -K fiings
77
US CLOSEDEND FUNDS
Interv funds, unike trdition CEFs, re permitted to continuous oer their shres t NAV foowing
their IPO. Most interv funds dier from trdition CEFs in tht the do not oer regur schedued
iquidit vi the secondr mrket (i.e., the tpic re not isted on n exchnge). Insted, the bu
bck shres b mking periodic repurchse oers t NAV in compince with Securities nd Exchnge
Commission (SEC) Rue c- under the  Act. There re some interv funds, however, tht re isted
on n exchnge nd re bought nd sod in the secondr mrket—nd these funds continue to mke
periodic repurchses t NAV vi Rue c-. Certin unisted interv funds re not vibe to the gener
pubic nd re primri hed b quified investors tht meet income, weth, nd/or sizebe minimum
investment threshods. At er-end , there were  interv funds with tot ssets of $biion
(Figure.).
For interv funds mking continuous oerings, purchses resembe open-end mutu funds in tht
their shres tpic re continuous oered nd priced di. However, unike  mutu fund, shres
re not continuous vibe for redemption but re repurchsed b the fund t schedued intervs
(e.g.,qurter, seminnu, or nnu). Further, the number of outstnding shres repurchsed
m vr, but must be between percent nd percent of outstnding shres. In ,  percent of
interv funds hd poicies to repurchse shres ever three months, whie the reminder hd poicies to
repurchse shres month, nnu, or semi-nnu.
Tender oer funds re gener unisted nd permitted to continuous oer their shres t NAV. Like
interv funds, certin tender oer funds re on sod to ccredited investors or other tpes of quified
investors. Unike interv funds, however, tender oer funds repurchse shres on  discretionr bsis
through  tender oer, which must comp with SEC Rue e- under the Securities Exchnge Act of 
b fiing  Schedue TO. There is no set schedue for when tender oer funds must conduct repurchses or
how mn shres the must tender. Some tender oer funds hod infrequent tender oers (e.g., one ever
 to  ers), but mn oer them more regur (e.g., qurter). In ,  percent of tender oer funds
hed tender oers four times during the er;  percent hed between one nd three tender oers; nd the
remining  percent did not hod n tender oer during the er. At er-end , there were  tender
oer funds with tot ssets of $ biion (Figure .).
Business deveopment compnies (BDCs) dier from other CEFs in tht the re not registered under the
 Act but insted eect to be subject to nd reguted b certin provisions of the  Act. BDCs
primri invest in sm nd medium-sized privte compnies, deveoping compnies, nd distressed
compnies tht do not otherwise hve ccess to ending. In prticur, BDCs must invest t est
percent of their ssets in domestic privte compnies or domestic pubic compnies tht hve mrket
cpitiztions of $ miion or ess. At er-end , there were  BDCs with tot net ssets of
$biion (Figure .).
BDCs m be isted or unisted. Listed BDCs re bought nd sod on stock exchnges in the secondr
mrket. Unisted BDCs either m be non-trded or privte. Non-trded BDCs re continuous oered
(ike unisted interv funds nd tender oer funds), m be vibe to reti investors, nd often conduct
periodic repurchse oers for investors to redeem their shres. Privte BDCs re sod through privte
pcement oerings on to quified investors. Privte BDCs tpic on oer those investors the
chnce to iquidte their shres b either going pubic (e.g., hoding n IPO) or choosing to unwind the
portfoio nd iquidte the fund. These iquidit events often occur between five nd  ers foowing the
initi privte pcement.
 INVESTMENT COMPANY FACT BOOK
78
Chrcteristics of Househods Owning CEFs
An estimted . miion US househods owned CEFs in  (see Figure.). These househods tended
to incude investors who owned  rnge of equit nd fixed-income investments. More thn eight in
househods owning CEFs so owned mutu funds, nd most seven in  so owned ETFs.
Becuse househods tht owned CEFs often so owned individu stocks nd mutu funds, the
chrcteristics of ech group were simir in mn respects. For instnce, househods tht owned CEFs
(ike househods owning individu stocks nd mutu funds) tended to hve househod incomes nd
finnci ssets bove the ntion medin nd were more ike to own retirement ccounts (Figure.).
Nonetheess, househods tht owned CEFs so exhibited certin dierences from mutu fund–owning
househods. For exmpe, percent of CEF–owning househods were retired from their ifetime
occuptions compred with percent of househods owning mutu funds. Househods owning CEFs
so expressed more wiingness to tke finnci risk—percent were wiing to tke bove-verge
orsubstnti risk compred with percent of mutu fund–owning househods.
79
US CLOSEDEND FUNDS
FIGURE
5.8
Cosed-End Fund Investors Hd Above-Averge Househod Incomes nd
Finnci Assets
2023
A US
househods
Househods
owning
cosed-end
funds
Househods
owning
mutu
funds
Househods
owning
individu
stocks
Medin
Age of househod surve respondent    
Househod income
$, $, $, $,
Househod finnci ssets
$, $, $, $,
Percentge of househods
Househod surve respondent
Mrried or iving with  prtner
   
Coege or postgrdute degree
   
Empoed (fu- or prt-time)
   
Retired from ifetime occuption
   
Househod owns
IRA(s)
   
DC retirement pn ccount(s)
   
Househod’s wiingness to tke finnci risk
Substnti risk for substnti gin

Above-verge risk for bove-verge gin
   
Averge risk for verge gin
   
Beow-verge risk for beow-verge gin
   
Unwiing to tke n risk

Tot reported is househod income before txes in .
Househod finnci ssets incude ssets in empoer-sponsored retirement pns but excude the househod’s primr residence.
Source: ICI Research Perspective, “The Cosed-End Fund Mrket, ”
CHAPTER
US Fund Expenses
and Fees
Mutu funds provide investors with mn investment-reted services, nd for those
services, investors incur two primr tpes of expenses nd fees: ongoing expenses
nd ses ods. Averge expense rtios (i.e., ongoing expenses) pid b US mutu
fund investors hve fen substnti over time. For exmpe, on n
sset-weighted bsis, verge expense rtios for equit mutu funds fe
from . percent in  to . percent in ,   percent decine.
Mutu fund shre csses with ses ods re fr ess common sod
tod thn the were  few decdes go. In , the vst mjorit
of gross ses to ong-term mutu funds went to shre csses tht
chrgeneither  ses od nor  b- fee.
IN THIS CHAPTER
 Trends in Mutu Fund Expenses
 Understnding the Decine in Mutu Fund Expense Rtios
 The Shift to No-Lod Funds
 Expense Rtios of Index Mutu Funds nd Index ETFs
CHAPTER 
 INVESTMENT COMPANY FACT BOOK
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81
US FUND EXPENSES AND FEES
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Trends in Mutu Fund Expenses
Mutu fund investors incur two primr tpes of expenses nd fees: ongoing expenses nd ses ods.
Ongoing expenses cover portfoio mngement, fund dministrtion, di fund ccounting nd pricing,
shrehoder services (such s c centers nd websites), distribution chrges (known s b- fees), nd
other operting costs. These expenses re incuded in  fund’s expense rtio—the fund’s nnu expenses
expressed s percentge of its ssets. Becuse expenses re pid from fund ssets, investors p these
expenses indirect. Ses ods re pid t the time of shre purchse (front-end ods), when shres re
redeemed (bck-end ods), or over time (eve ods). Mutu fund shre csses with  ses od re fr
ess common sod tod thn the were  few decdes go s investors hve grvitted towrd funds
without them (see pge ).
On n sset-weighted bsis, verge expense rtios* incurred b mutu fund investors hve fen
substnti (Figure.). In , equit mutu fund investors incurred expense rtios of .percent,
on verge, or  cents for ever $ invested. B , tht verge hd fen to .percent, 
percent decine. Hbrid nd bond mutu fund expense rtios hve so decined over this period,
bpercent nd percent, respective.
Like the prices of most goods nd services, the expense rtios of individu mutu funds dier
considerb cross the rr of vibe products. The expense rtios of individu funds depend
on mn fctors, incuding investment objective, fund ssets, pments to finnci intermediries
(seepge), nd whether the fund is ctive mnged or trcks n index (see pge ).
* In this chpter, uness otherwise noted, verge expense rtios re ccuted on n sset-weighted bsis. ICI’s fee reserch uses
sset-weighted verges to summrize the expenses nd fees tht shrehoders p through funds. In this context, sset-weighted
verges re preferbe to simpe verges, which woud overstte the expenses nd fees of funds in which investors hod few
dors. ICI weights the expense rtio of ech fund’s shre css b its er-end ssets.
The fund investment ctegories used in this chpter re brod nd encompss diverse investment stes (e.g., ctive nd index), 
rnge of gener investment tpes (e.g., equit, bond, nd hbrid funds), nd  vriet of rrngements for shrehoder services,
recordkeeping, or distribution chrges (known s b- fees). This mteri is intended to provide gener informtion on fees
incurred b investors through funds s we s insight into verge fees cross the mrketpce. It is not intended for benchmrking
fees nd expenses incurred b  prticur investor, or chrged b  prticur fund or other investment product.
Trends in the Expenses nd Fees of Funds, 
www.ici.org/fies//per-.pdf
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FIGURE
6.1
Expense Rtios Incurred b Mutu Fund Investors Hve Decined Substnti
Since 
Percent
Simple average
Asset-weighted average
202320202010200020232020201020002023202020102000
Equity mutual funds
1.60
1.11
1.46
1.16
0.99
0.83
0.50
0.42
Hybrid mutual funds
1.44
1.20
1.36
1.16
0.89
0.82
0.61
0.58
Bond mutual funds
1.03
0.85
1.13
0.83
0.76
0.63
0.42
0.37
Note: Dt excude mutu funds vibe s investment choices in vribe nnuities.
Sources: Investment Compn Institute, Lipper, nd Morningstr. See ICI Research Perspective, “Trends in the Expenses nd Fees of
Funds,.”
Mutu Fund Investment Objective
Mutu fund expense rtios vr b investment objective. For exmpe, bond mutu funds nd mone
mrket funds tend to hve ower expense rtios thn equit mutu funds. Among equit mutu funds,
expense rtios tend to be higher for funds tht speciize in  given sector—such s hethcre or re
estte—or those tht invest in equities round the word, becuse such funds tend to cost more to
mnge. Even within  prticur investment objective, mutu fund expense rtios cn vr considerb.
For exmpe, percent of equit mutu funds tht focus on growth stocks hve expense rtios of
.percent or ess, whie nother percent hve expense rtios of .percent or more (Figure.).
Among other things, this vrition reects the fct tht some growth funds focus more on sm- or mid-
cp stocks nd others focus more on rge-cp stocks. Portfoios of sm- nd mid-cp stocks tend to cost
more to mnge since informtion bout these tpes of stocks is ess redi vibe, which mens tht
ctive portfoio mngers must spend more time doing reserch.
Five Importnt Points on Mutu Fund Fees nd Expenses
www.ici.org/files/2024/quick-facts-mutual-fund-fees.pdf
83
US FUND EXPENSES AND FEES
FIGURE
6.2
Mutu Fund Expense Rtios Vr Across Investment Objectives
Percent, 2023
0.00
0.40
0.80
1.20
1.60
2.00
90th percentile
Median
10th percentile
Index
equity
Active
equity
US small
cap equity
US large
cap equity
Growth
equity
All equity
Asset-weighted average
Simple average
Note: Ech fund’s shre css is weighted equ for the simpe verge nd the medin, th, nd th percenties. Dt excude
mutu funds vibe s investment choices in vribe nnuities.
Sources: Investment Compn Institute nd Morningstr
Understnding the Decine in Mutu Fund Expense Rtios
Sever fctors hep ccount for the ong-term downwrd trend in mutu fund expense rtios. First,
expense rtios often vr inverse with fund ssets. Some fund costs incuded in expense rtios—such s
trnsfer genc fees, ccounting nd udit fees, nd directors’ fees—re more or ess fixed in dor terms.
This mens tht when  fund’s ssets rise, these costs contribute ess to  fund’s expense rtio.
Another fctor contributing to the decine of the verge expense rtios of ong-term mutu funds is the
shift towrd no-od shre csses, prticur institution no-od shre csses, which tend to hve
beow-verge expense rtios. In prt, this shift reects  chnge in how investors p for services from
brokers nd other finnci professions (see pge ).
Mutu fund expense rtios so hve fen becuse of competition nd economies of sce. Investor
demnd for mutu fund services hs incresed drmtic in the pst few decdes. From  to
, the number of househods owning mutu funds ner triped—from . miion to .miion
(see Figure.). A ese being equ, this shrp increse in demnd woud tend to boost mutu fund
expense rtios. An such tendenc, however, ws mitigted b downwrd pressure on expense rtios—
from competition mong existing mutu fund sponsors, new mutu fund sponsors entering the industr,
competition from products such s exchnge-trded funds (ETFs) (see chpter, Figure., nd pge
of this chpter), competition from coective investment trusts (CITs) in retirement pns (see Figure.),
nd economies of sce resuting from the growth in fund ssets.
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Fin, shrehoders indicte tht the tpic reviewed the fund’s fees nd expenses when seecting
their mutu funds (see Figure.) nd tend to invest in mutu funds with beow-verge expense rtios.
The simpe verge expense rtio of equit mutu funds (the verge for  equit mutu funds oered
for se) ws .percent in  (Figure.). The sset-weighted verge expense rtio for equit mutu
funds (the verge shrehoders ctu pid) ws fr ower, t .percent. Another w to iustrte
the tendenc for investors to grvitte to ower-cost funds is to exmine how the oction of their ssets
cross funds vries b expense rtio. At er-end , equit mutu funds with expense rtios in the
owest qurtie hed most (percent) of equit mutu funds’ tot net ssets, nd this pttern hods for
both ctive mnged nd index equit mutu funds.
The Shift to No-Lod Funds
Mn mutu fund investors engge n investment profession, such s  broker, n investment dviser,
or  finnci pnner. Among househods owning mutu fund shres outside empoer-sponsored
retirement pns, percent own mutu fund shres through investment professions (see Figure.).
These professions cn provide mn benefits to investors, such s heping them identif finnci gos,
nzing n existing finnci portfoio, determining n pproprite sset oction, nd—depending
on the tpe of finnci profession—providing investment dvice or recommendtions to hep investors
chieve their finnci gos. The investment profession so m provide ongoing services, such s
responding to investors’ inquiries or periodic reviewing nd rebncing their portfoios.
Over the pst few decdes, the w tht fund shrehoders compenste finnci professions hs
chnged significnt, moving w from ses ods (e.g., front-end ods) nd towrd sset-bsed fees.
An importnt eement in the chnging distribution structure of mutu funds hs been this shift towrd
sset-bsed fees, which re ssessed s percentge of the ssets tht the finnci profession heps
n investor mnge. Incresing, these fees compenste brokers nd other finnci professions who
se mutu funds. An investor m p n sset-bsed fee indirect through  fund’s b- fee, which is
incuded in the fund’s expense rtio, or direct (out of pocket) to the finnci profession, in which cse it
is not incuded in the fund’s expense rtio.
The shift towrd no-od shre csses hs been n importnt force in driving down the verge expense
rtio of mutu funds. Some movement towrd no-od funds cn be ttributed to “do-it-oursef” investors
who invest through discount brokers or direct with fund compnies. Another fctor is n ongoing shift to
compenste finnci professions with sset-bsed fees outside of mutu funds (for exmpe, through
fee-bsed professions nd fu-service brokerge ptforms). Addition, ssets nd ows to no-od
shre csses hve been bostered b (k) pns nd other retirement ccounts. Gross ses to no-od
mutu funds without b- fees hve grown substnti since  nd were percent of tot gross
ses to ong-term mutu funds in  (Figure.).
IRA Mutu Fund Investors Rep the Benefits of Decining Fund Expense Rtios
www.ici.org/fies//-ir-fees.pdf
85
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The Economics of Providing (k) Pns: Services, Fees, nd Expenses, 
www.ici.org/fies//per-.pdf
FIGURE
6.3
Long-Term Mutu Fund Investors Hve Incresing Purchsed No-Lod Mutu Funds
Without b- Fees
Percentage of long-term mutual fund gross sales, annual
20232022202120202015201020052000
46
59
68
79
88
89
91
92
Note: Dt excude mutu funds vibe s investment choices in vribe nnuities nd “R” shre csses.
Sources: Investment Compn Institute, Lipper, nd Morningstr. See ICI Research Perspective, “Trends in the Expenses nd Fees of
Funds,.”
Expense Rtios of Index Mutu Funds nd Index ETFs
An index fund gener seeks to repicte the return on  specified index. Under this pproch, often referred
to s pssive mngement, portfoio mngers bu nd hod —or  representtive smpe of—the securities
in their trget indexes. This pproch to portfoio mngement is  primr reson tht both index mutu
funds nd index ETFs tend to hve beow-verge expense rtios. B contrst, under n ctive mngement
pproch, mngers hve more discretion to increse or reduce exposure to sectors or securities within their
funds’ investment mndtes. Active mngers m so undertke significnt reserch bout stocks or bonds,
mrket sectors, or geogrphic regions. This pproch oers investors the chnce to ern superior returns
or to meet other investment objectives such s imiting downside risk, mnging votiit, underweighting
or overweighting vrious sectors, nd tering sset octions in response to mrket conditions. These
chrcteristics tend to mke ctive mngement more cost thn mngement of n index fund.
The rising popurit of index funds over the pst two decdes hs contributed to the decine in ong-term
mutu fund expense rtios. For exmpe, the growth in index mutu fund ssets hs pced downwrd
pressure on sset-weighted verge expense rtios of  ong-term mutu funds. Tot net ssets of index
mutu funds grew to $. triion t er-end  nd represented percent of  ong-term mutu fund
net ssets. Addition, the growth of ETFs (in prticur, index ETFs) hs so been  fctor in the decrese
in ong-term mutu fund expense rtios s mutu funds nd ETFs compete for mrket shre. As  whoe, the
shre of  ong-term mutu fund nd ETF net ssets hed in index funds hs incresed from percent t
er-end  to percent t er-end  (see Figure.).
 INVESTMENT COMPANY FACT BOOK
86
Index Mutu Funds
Index mutu funds tend to hve beow-verge expense rtios for sever resons. First, their pproch to
portfoio mngement ends itsef to being ess cost. This is becuse index funds’ portfoios tend not to
chnge frequent, nd therefore hve ow turnover rtes.
Second, index mutu funds tend to hve beow-verge expense rtios becuse of their investment focus.
Net ssets of index equit mutu funds re concentrted more hevi in rge-cp bend funds tht trget
US rge-cp indexes, such s the S&P . Net ssets of ctive mnged equit mutu funds, on the
other hnd, re more wide distributed cross stocks of vring cpitiztions, interntion regions, or
speciized business sectors, which re gener cknowedged to cost more to mnge (see pge ).
Fin, index mutu funds re rger on verge thn ctive mnged mutu funds, which, through
economies of sce, heps reduce fund expense rtios. At er-end , the verge index equit
mutu fund ($. biion) ws significnt rger thn the verge ctive mnged equit mutu fund
($.biion). These resons, mong others, hep expin wh index mutu funds gener hve ower
expense rtios thn ctive mnged mutu funds. However, it is importnt to note tht both index nd
ctive mnged mutu funds hve contributed to the decine in the verge expense rtios of mutu
funds (Figure.).
The downwrd trend in the verge expense rtios of both index nd ctive mnged mutu funds
reects, in prt, investors’ incresing tendenc to bu ower-cost funds. Investor demnd for index mutu
funds is disproportionte concentrted in funds with the owest costs. Index equit mutu funds with
expense rtios in the owest qurtie hed percent of index equit mutu funds’ net ssets t er-
end . This phenomenon is not unique to index mutu funds, however; the proportion of ssets in the
owest-cost ctive mnged mutu funds is so high (percent).
FIGURE
6.4
Averge Expense Rtios of Active Mnged nd Index Mutu Funds Hve Fen
Percent
0.00
0.20
0.40
0.60
0.80
1.00
1.20
20232020201020002023202020102000
Actively managed mutual funds
Equity mutual funds
Bond mutual funds
Index mutual funds
0.71
0.16
0.06
1.06
0.96
0.27
0.05
0.77
0.67
0.50
0.46
0.65
0.21
0.14
Note: Expense rtios re mesured s sset-weighted verges. Dt excude mutu funds vibe s investment choices in vribe
nnuities.
Sources: Investment Compn Institute, Lipper, nd Morningstr. See ICI Research Perspective, “Trends in the Expenses nd Fees of
Funds,.”
87
US FUND EXPENSES AND FEES
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Index ETFs
ETF tot net ssets hve grown rpid in recent ers, from $ biion t er-end  to $.triion
t er-end  (see Figure.). ETFs re rge index-bsed nd gener registered with the
Securities nd Exchnge Commission (SEC) under the Investment Compn Act of . Active mnged
ETFs registered under the  Act represented .percent of ETF tot net ssets t er-end , nd
ETFs not registered under the  Act represented .percent.
Prt of the strong growth in ETFs is ttributbe to their distribution structure, in which the ETF gener
chrges n expense rtio tht provides no compenstion to finnci professions. Compenstion to
finnci professions for distribution or ccount servicing nd mintennce is tpic pid direct b
the investor.* And becuse ETFs re gener index funds, the tpic hve ower expense rtios.
Like mutu fund investors, ETF shrehoders tend to invest in funds with beow-verge expense rtios.
For exmpe, the simpe verge expense rtio of index equit ETFs (the verge for  index equit
ETFs oered for se) ws .percent in . The sset-weighted verge expense rtio for index
equit ETFs (the verge shrehoders ctu pid) ws much ess thn tht, .percent (Figure.).
As with mutu funds, both index nd ctive mnged ETFs hve contributed to the decine in the
verge expense rtios of ETFs.
* Some ETFs bunde distribution fees in the expense rtio to cover mrketing nd distribution expenses. These fees re usu sm,
tpic no more thn .percent.
FIGURE
6.5
Averge Expense Rtios of Active Mnged nd Index ETFs Hve Fen
Percent
0.00
0.20
0.40
0.60
0.80
1.00
2023202120192017201520232021201920172015
Actively managed ETFs
Equity ETFs
Bond ETFs
Index ETFs
0.90
0.18
0.82
0.21
0.15
0.25
0.53
0.43
0.40
0.47
0.48
0.74
0.39
0.35
0.17
0.14
0.18
0.11
0.20
0.12
Note: Expense rtios re mesured s sset-weighted verges. Dt excude ETFs not registered under the Investment Compn Act
of .
Sources: Investment Compn Institute, Lipper, nd Morningstr. See ICI Research Perspective, “Trends in the Expenses nd Fees of
Funds,.”
Exchnge-Trded Funds Resource Center
www.ici.org/etf
CHAPTER
Characteristics of
US Mutual Fund Owners
A mjorit of US househods re on mutu funds to hep them meet their finnci
gos. These mutu fund–owning househods represent  brod rnge of the
USpopution—coming from  ge nd income groups. For instnce, GenertionZ
nd Mienni househods re we on their w to widespred mutu fund
ownership. Mutu fund investors, who often re primri sving for retirement,
mke informed purchsing decisions b reserching their fund investment choices
nd often seeking the ssistnce of investment professions.
IN THIS CHAPTER
 Househod Ownership of Mutu Funds Is Widespred
 Mutu Fund–Owning Househods Reect Everd Peope
 Mutu Fund Ownership Tends to Rise Across the Genertions
 Mutu Fund Ownership Ptterns Vr b Genertion
 Mutu Fund–Owning Househods Primri Sve for Retirement
 Mn Mutu Fund–Owning Househods Re on Investment Professions
 Mutu Fund–Owning Househods Mke Informed Purchsing Decisions
CHAPTER 
 INVESTMENT COMPANY FACT BOOK
88
7
89
CHARACTERISTICS OF US MUTUAL FUND OWNERS
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Househod Ownership of Mutu Funds Is Widespred
Mutu funds re n importnt w US househods buid their finnci weth. In , ICI conducted its
test nnu ntionwide househod surve, which found tht bout percent of US househods owned
shres of mutu funds or other US-registered investment compnies—incuding exchnge-trded funds
(ETFs), cosed-end funds (CEFs), nd unit investment trusts (UITs)—representing n estimted . miion
househods (Figure.).
Mutu funds were the most common tpe of fund owned, with . miion US househods, or percent,
owning them in  (Figure.). A tod,  miion individu investors owned mutu funds in . In
ggregte, US househods’ investment in funds represents more thn one-fifth of their finnci ssets, 
higher shre thn seen in other jurisdictions (see Figure.).
FIGURE
7.1
Mutu Funds Are  Ke Investment Product for US Househods
Ownership of US-registered investment companies; millions of US households, 2023
Share of US household
financial assets
held in US-registered
investment companies
23%
MEMO:
Percentage of
US households
US-registered
investment
companies
71.5
54%
Mutual funds
68.7
52%
Exchange-traded
funds
15.2
12%
Closed-end
funds
3.2
2%
Sources: Investment Compn Institute, US Census Bureu, nd Feder Reserve Bord
Ownership of Mutu Funds nd Shrehoder Sentiment, 
www.ici.org/fies//per-.pdf
 INVESTMENT COMPANY FACT BOOK
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Mutu Fund–Owning Househods Reect Everd Peope
Househods tht own mutu funds come from  demogrphic groups nd tpic re working nd
sving for retirement (Figure.). In , the medin mutu fund–owning hed of househod:
■
ws midde-ged, empoed, nd educted;
■
owned mutu funds inside n empoer-sponsored retirement pn;
■
purchsed their first mutu fund through n empoer-sponsored retirement pn;
■
owned mutu funds outside empoer-sponsored retirement pns, primri purchsed through
investment professions (registered investment dvisers, fu-service brokers, independent finnci
pnners, bnk or svings institution representtives, insurnce gents, or ccountnts);
■
hd more thn hf of the househod’s finnci ssets (excuding the primr residence) invested in
mutufunds;
■
owned n IRA;
■
ws using mutu funds to sve for retirement; nd
■
ws confident tht mutu funds coud hep them rech their finnci gos.
Mn US mutu fund shrehoders hd moderte househod incomes nd were in their pek erning
nd sving ers. More thn two-thirds of US househods owning mutu funds hd nnu incomes
ess thn $,, nd percent were heded b individus between the ges of  nd  in 
(Figure.). The medin mutu fund–owning househod hd $, in househod income, $,
in househod finnci ssets, nd $, invested in three mutu funds, incuding t est one equit
mutu fund.
Members of the Bb Boom Genertion nd Genertion X heded the rgest shres of mutu fund–
owning househods in , reecting both their genertion’s sizes nd their high rtes of mutu fund
ownership. Thirt-fivepercent of househods owning mutu funds were heded b members of the Bb
Boom Genertion, nd percent were heded b members of Genertion X (Figure.).
Chrcteristics of Mutu Fund Investors, 
www.ici.org/fies//per-.pdf
91
CHARACTERISTICS OF US MUTUAL FUND OWNERS
FIGURE
7.2
Mutu Fund–Owning Househods Are from A Demogrphic Groups
Percentage of mutual fund–owning households, 2023
Confident mutual funds can help them
reach their financial goals
Save for education
Reduce taxable income
Save for emergencies
Save for retirement
Purchased first mutual fund through an
employer-sponsored retirement plan
Bought their first mutual fund before 2000
Own equity mutual funds
Own defined contribution (DC)
retirement plan accounts
Own individual retirement accounts (IRAs)
Hold more than half of their financial assets
in mutual funds
Millennial Generation
Generation X
Baby Boomers
Retired
Household income under $150,000
Employed (full- or part-time)
College graduates
Aged 35 to 64
52
54
64
69
35
35
27
26
67
66
82
79
42
64
90
27
20
80
Who are they?
What do they own?
When and how did they make their first mutual fund purchase?
Why do they invest in mutual funds?
12
Sources: ICI Research Perspective, “Ownership of Mutu Funds nd Shrehoder Sentiment, ”; ICI Research Perspective,
“Chrcteristics of Mutu Fund Investors, ”; nd ICI Research Report, “Profie of Mutu Fund Shrehoders, ”
 INVESTMENT COMPANY FACT BOOK
92
Mutu Fund Ownership Tends to Rise Across the Genertions
Mutu fund–owning househods re heded b members of  genertions, but members of the oder
genertions, who hve hd more time to sve, hd the highest ownership rtes in . More thn hf of
househods heded b  member of Genertion X, the Bb Boom Genertion, or the Sient Genertion
owned mutu funds in  (Figure.). Younger househods were we on their w to widespred
mutu fund ownership: percent of Mienni househods nd percent of Genertion Z househods
owned mutu funds in .
The Bb Boom Genertion hed the mjorit (percent) of US househods’ mutu fund ssets
(Figure.), reecting: ()the genertion’s immense size, () their high rte of mutu fund ownership,
nd () the decdes the hve hd to sve nd invest. Genertion X househods hed percent
of househods’ tot mutu fund ssets, nd Sient Genertion househods hed nother percent.
Genertion Z nd Mienni househods—who re ounger nd hve not hd s much time to sve s
Bb Boom househods (who hve gone through or re in their pek erning nd sving ers)—hed the
remining percent of househods’ mutu fund ssets.
FIGURE
7.3
Mutu Fund Ownership Is Higher Among Oder Genertions
Percentage of US households within each generation group, 2023
Silent Generation Baby Boom GenerationGeneration X Millennial GenerationGeneration Z*
Age of the household survey
respondent in 2023
78 or older
56
43 to 58
54
27 to 42
48
18 to 26*
35
57
59 to 77
* Genertion Z (born  to ) re ged  to  in ; surve respondents, however, must be  or oder.
Note: Genertion is bsed on the ge of the househod surve respondent.
Source: ICI Research Perspective, “Chrcteristics of Mutu Fund Investors, ”
93
CHARACTERISTICS OF US MUTUAL FUND OWNERS
Mutu Fund Ownership Ptterns Vr b Genertion
How househods own mutu funds often depends on where the re in the ifecce of investing.
Becuse ounger genertions re more ike to be er in their creers, the re more ike to
own mutu funds on inside empoer-sponsored retirement pns. As Americns chnge jobs over
their creers, the m ro over retirement svings to IRAs, nd oder genertions re more ike to
own funds outside empoer-sponsored retirement pns. In , percent of mutu fund–owning
Mienni househods hed funds on inside empoer-sponsored retirement pns, compred with
percent of mutu fund–owning Bb Boom househods (Figure.). Sixt-threepercent of mutu
fund–owning Mienni househods owned funds outside of empoer-sponsored retirement pns,
compred with percent of mutu fund–owning Bb Boom househods. Mienni nd GenertionX
househods re moreike thn other genertions to own funds both inside nd outside empoer-
sponsored retirement pns. At percent, mutu fund–owning Sient Genertion househods re the
most ike to hod them on outside empoer-sponsored retirement pns, perhps reecting imited
ccess to defined contribution (DC) pns er in their creers or consoidtion of retirement svings
into IRAs when the retired.
FIGURE
7.4
Bb Boomers Are the Lrgest Genertion of Mutu Fund Owners
Percentage of US households owning mutual funds or total household mutual fund assets, 2023
Generation Z*
Millennial Generation
Generation X
Baby Boom Generation
Silent Generation
Percentage of household mutual fund assetsPercentage of households
8
27
26
4
35
9
26
12
1
52
Generation of household survey respondent
* Genertion Z (born  to ) re ged  to  in ; surve respondents, however, must be  or oder.
Note: Genertion is bsed on the ge of the househod surve respondent.
Source: ICI Research Perspective, “Chrcteristics of Mutu Fund Investors, ”
 INVESTMENT COMPANY FACT BOOK
94
Mutu Fund–Owning Househods Primri Sve for Retirement
Mutu fund–owning househods overwheming report tht sving for retirement is one of their finnci
gos (percent, with percent indicting it is the househod’s primr go) nd tht the re
confident mutu funds cn hep them rech their finnci gos (percent) (Figure.). The importnce
tht mutu fund–owning househods pce on retirement sving is reected in where the own their
funds—in , percent hed mutu fund shres inside empoer-sponsored retirement pns, IRAs, or
vribe nnuities.
FIGURE
7.5
Mutu Fund Ownership Often Occurs Through Empoer-Sponsored Retirement Pns
Percentage of mutual fund–owning households by generation, 2023
Silent
Generation
Baby Boom
Generation
Generation X Millennial
Generation
Generation Z*All US households
owning mutual funds
Outside employer-sponsored retirement plans only
Inside and outside employer-sponsored retirement plans
Inside employer-sponsored retirement plans only
30
43
27
50
36
14
37
49
14
37
47
16
22
41
37
9
28
63
Source of mutual fund ownership
* Genertion Z (born  to ) re ged  to  in ; surve respondents, however, must be  or oder.
Note: Genertion is bsed on the ge of the househod surve respndent. Empoer-sponsored retirement pns incude DC pns (such
s (k), (b), or  pns) nd empoer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, nd SIMPLE IRAs).
Source: ICI Research Perspective, “Chrcteristics of Mutu Fund Investors, ”
95
CHARACTERISTICS OF US MUTUAL FUND OWNERS
LEARN
MORE
FIGURE
7.6
Househods’ Mutu Fund Assets Reect  Long-Term Investment Focus
Billions of dollars, year-end 2023
Other household accounts
1
Variable annuities outside retirement plans
IRAs
2
DC plans
3
Households’ money
market funds
Households’ long-term
mutual funds
5,858
5,261
1,264
6,207
199 559
34
3,157
3,949
18,589
Mutu funds hed s investments in  pns nd Coverde ESAs re counted in this ctegor.
IRAs incude trdition IRAs, Roth IRAs, nd empoer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, nd SIMPLE IRAs).
DC pns incude (k) pns, (b) pns,  pns, nd other DC pns without (k) fetures.
Profie of Mutu Fund Shrehoders, 
www.ici.org/fies//-rpt-profies.pdf
Given this ong-term focus nd the importnce of retirement sving, most of househods’ mutu funds were
invested in ong-term mutu funds (equit, hbrid, nd bond funds). Addition, more thn hf of these
ong-term mutu fund ssets were hed in DC pns nd IRAs (Figure.). At er-end , ong-term
mutu fund ssets hed in DC pns nd IRAs ccounted for $. triion, or percent of househods’
ong-term mutu fund ssets. Househods hd nother $. triion in ong-term vribe nnuit mutu
fund ssets outside retirement pns, which hve simir tx dvntges nd restrictions s retirement
pns nd re counted s prt of Americns’ nest egg for retirement (see Figures . nd .). In ddition,
househods hed  retive sm mount of mone mrket fund ssets in DC pns, IRAs, nd vribe
nnuities outside retirement pns.
 INVESTMENT COMPANY FACT BOOK
96
FIGURE
7.7
Mutu Fund Investments Outside Retirement Pns Are Often Guided
b Investment Professions
2023
Outside employer-
sponsored retirement
plans only
1
Inside and outside
employer-sponsored
retirement plans
1
Inside employer-
sponsored retirement
plans only
1
18%
Investment professionals
2
and fund companies
or discount brokers
21%
Fund companies or
discount brokers only
14%
Source unknown
48%
Investment
professionals
only
2
Sources of mutual fund ownership
Percentage of US households owning
mutual funds
Sources for households owning mutual funds
outside employer-sponsored retirement plans
Percentage of US households owning mutual funds
outside employer-sponsored retirement plans
1
27
43
30
Empoer-sponsored retirement pns incude DC pns (such s (k), (b), or  pns) nd empoer-sponsored IRAs (SEP IRAs,
SAR-SEP IRAs, nd SIMPLE IRAs).
Investment professions incude registered investment dvisers, fu-service brokers, independent finnci pnners, bnk nd svings
institution representtives, insurnce gents, nd ccountnts.
Source: ICI Research Perspective, “Chrcteristics of Mutu Fund Investors, ”
Mn Mutu Fund–Owning Househods Re on Investment
Professions
Househods owning mutu funds outside empoer-sponsored retirement pns often seek the ssistnce
of investment professions. In , percent of these househods owned mutu funds purchsed
with the hep of investment professions: percent owned funds purchsed soe with the hep of n
investment profession nd nother percent owned funds purchsed from investment professions
nd direct from fund compnies or discount brokers (Figure.).
Retirement sving is so importnt for househods hoding mutu funds on outside empoer-sponsored
retirement pns, with percent hoding funds in trdition or Roth IRAs. In mn cses, these IRAs hed
ssets roed over from (k) pns or other empoer-sponsored retirement pns (either defined benefit
or DC pns).
97
CHARACTERISTICS OF US MUTUAL FUND OWNERS
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Mutu Fund–Owning Househods Mke Informed Purchsing
Decisions
The surve so sked mutu fund–owning househods bout the importnce of  vriet of fctors when
mking their mutu fund purchse decisions.
In , percent of mutu fund–owning househods considered  fund’s investment objective when
mking their purchse decision (Figure.). Simir, percent of mutu fund–owning househods
reviewed the risk eve of  fund’s investments. The vst mjorit of mutu fund–owning househods
so reviewed the historic performnce of  fund nd considered  fund’s performnce compred with
n index.
Mutu fund–owning househods so tpic reviewed the fund’s fees nd expenses when seecting
their mutu funds. Indeed, mutu fund investors tend to concentrte their ssets in ower-cost funds
(see Chpter ).
FIGURE
7.8
Most Mutu Fund–Owning Househods Reserch Fund Investments
Percentage of mutual fund–owning households, 2023
Fund’s investment objective
Risks associated with
investing in the fund
Historical performance
Performance compared
with an index
Mutual fund rating service
Fees and expenses
Very important Somewhat important Not very important Not at all important
17 42 23 18
37 7848
47 42
56
40 5847
34 48 11 7
48 39 8 5
Source: ICI Research Perspective, “Wht US Househods Consider When The Seect Mutu Funds, ”
Wht US Househods Consider When The Seect Mutu Funds, 
www.ici.org/fies//per-.pdf
CHAPTER
US Retirement and
Education Savings
Ntion poicies tht hve creted or enhnced tx-dvntged svings ccounts
hve proven integr to heping Americns sve for retirement nd other ong-term
gos. Assets ermrked for retirement represent cose to one-third of US househods’
finnci ssets, nd mn Americns use mutu funds in tx-dvntged
retirement ccounts. ICI studies the US retirement mrket; the investors
who use (k) pns, IRAs,  pns, nd other tx-dvntged svings
vehices; nd the roe of mutu funds in the retirement nd eduction
svings mrkets. At er-end , individu ccount-bsed retirement
svings were  percent of the tot US retirement mrket, nd mutu
funds mnged bout hf of those ccount-bsed retirement ssets.
IN THIS CHAPTER
 The US Retirement Sstem Hs Mn Components
 The US Retirement Sstem Produces Robust Income Repcement in Retirement
 Defined Contribution Pns P n Incresing Roe in RetirementSving
 IRAs Are  Significnt Prt of US Retirement Svings
 The Roe of Mutu Funds in Retirement Svings
 Mutu Funds Aso P  Roe in Eduction Svings
CHAPTER 
 INVESTMENT COMPANY FACT BOOK
98
8
99
US RETIREMENT AND EDUCATION SAVINGS
The US Retirement Sstem Hs Mn Components
Americn househods re on  combintion of resources in retirement, nd the roe ech tpe of resource
ps hs chnged over time nd vries cross househods. The trdition nog compres retirement
resources to  three-egged stoo, with resources divided equ mong the egs—Soci Securit,
empoer-sponsored retirement pns, nd privte svings. A better nog, however, is to think of
Americns’ retirement resources s  five-er prmid. Unike the egs of  stoo, prmid ers need
not be the sme size.
Americns’ Muti-Tiered Retirement Resources
The retirement resource prmid hs five ers, which drw from government progrms, compenstion
deferred unti retirement, nd other svings (Figure .):
■
Soci Securit
■
Homeownership
■
Empoer-sponsored retirement pns (privte-sector nd government empoer pns, incuding both
defined benefit [DB] nd defined contribution [DC] pns)
■
Individu retirement ccounts (IRAs), incuding roovers
■
Other ssets
FIGURE
8.1
US Househods Re on Muti-Tiered Retirement Resources
Other assets
Homeownership
IRAs
(including rollovers)
Employer-sponsored retirement plans
(DB and DC plans)
Social Security
Source: Investment Compn Institute, The Success of the US Retirement System
 INVESTMENT COMPANY FACT BOOK
100
Together, these resources hve brod enbed recent genertions of retirees to mintin their stndrd
of iving in retirement, though the use of ech er diers b househod. For exmpe, the composition
of househods’ retirement resources vries with income. Lower-income househods tend to re more on
Soci Securit, reecting the fct tht Soci Securit benefits repce  higher shre of pre-retirement
ernings for workers with owerifetime ernings.
The mount nd composition of retirement resources so chnge with ge. Younger househods re
more ike to sve primri for  home purchse, fmi, or eduction (Figure .). B contrst, oder
househods re moreike to sve primri for retirement, s mn hve red reched their other
svings gos. The tendenc of ounger workers to focus ess on sving for retirement is consistent with
economic modes of ife-cce consumption, which predict tht most workers de sving for retirement
unti ter in their creers, when the tpic hve higher ernings.
FIGURE
8.2
Primr Reson for Househod Sving Chnges with Age
Percentage of households by age of household reference person, 2022
RetirementHome purchase, family, or education
3838
21
19
16
8
12
19
20
24
21 to 29
30 to 39
40 to 44
45 to 54
55 to 64
Age of household head
Primary reason for saving
Source: Investment Compn Institute tbutions of the  Feder Reserve Bord Surve of Consumer Finnces
101
US RETIREMENT AND EDUCATION SAVINGS
FIGURE
8.3
Soci Securit Benefit Formu Is High Progressive
Average scheduled Social Security replacement rates for workers in the 1960s birth cohort
by quintile of lifetime household earnings, percent
Quintile of lifetime household earnings
Highest
31
Fourth
41
Middle
49
Second
58
Lowest
78
Note: The repcement rte is the rtio of Soci Securit benefits net of income tx to verge intion-indexed ifetime ernings.
Repcement rtes re for workers ciming benefits t ge . For workers born in the s, the Soci Securit fu benefit retirement
ge is . If these workers cimed benefits t ge , benefits woud increse b bout  percent.
Source: Congression Budget Oce, CBO’s 2021 Long-Term Projections for Social Security: Additional Information
Social Security, the bse of the US retirement resource prmid, is  substnti component of retiree
income nd the primr source of income for ower-income retirees. Soci Securit benefits re funded
through  pro tx equ to .percent of ernings of covered workers (spit equ between
empoers nd empoees) up to  mximum txbe ernings mount ($, in ). The benefit
formu is high progressive, with benefits representing  much higherpercentge of ernings for workers
with ower ifetime ernings.
B design, Soci Securit is the primr mens of support for retirees with ow ifetime ernings nd 
substnti source of income for  retired workers. The Congression Budget Oce estimtes tht,
for those in the owest quintie (percent) of househods rnked b ifetime househod ernings, first-
er Soci Securit benefits wi repce percent of intion-indexed ifetime ernings, on verge,
for workers born in the s who cim benefits t ge  (Figure .). Tht repcement rte drops to
percent for workers in the second quintie of househods, nd then decines more sow s ifetime
househod ernings increse. Even for workers in the top percent of househods, Soci Securit
benefits re projected to repce  considerbe portion (percent) of ernings.
 INVESTMENT COMPANY FACT BOOK
102
Homeownership is the second most importnt retirement resource fter Soci Securit for mn ner-
retiree househods. Oder househods re more ike to own their homes, more ike to own their homes
without mortgge debt, nd more ike to hve sm mortgges retive to the vue of their homes if the
do sti hve mortgges. Retired househods tpic benefit from this resource simp b iving in their
homes rent-free.
Employer-sponsored retirement plans and IRAs, which compement Soci Securit benefits nd re
importnt resources for househods regrdess of income or weth, increse in importnce for househods
for which Soci Securit repces  smer shre of ernings. In , more thn three-qurters of
ner-retiree househods hd ccrued benefits in empoer-sponsored retirement pns—DB nd DC pns
sponsored b privte-sector nd government empoers—or IRAs (Figure .).
Fin, though ess importnt on verge, retirees so re on other assets in retirement. These
ssets cn be finnci—incuding bnk deposits, stocks, bonds, nd mutu funds owned outside
empoer-sponsored retirement pns nd IRAs. The so cn be nonfinnci—incuding business
equit, investment re estte, second homes, nd consumer durbes (ong-ived goods such s
vehices,househod ppinces, nd furniture). Higher-income househods re more ike to hve rge
hodings of ssets in this ctegor.
FIGURE
8.4
Ner-Retiree Househods Across A Income Groups Hve Retirement Assets,
DB Pn Benefits, or Both
Percentage of near-retiree households
1
by income quintile,
2
2022
40
29
9
77
All
62
35
1
98
Highest
$239,962
or more
40
46
9
95
Fourth
$125,386 to
$239,962
33
38
15
85
Middle
$84,311 to
$125,386
37
18
10
65
Second
$43,236 to
$84,311
28
6
9
42
Lowest
$43,236
or less
Household income quintile
2
DB plan benefits only
3
Both DB plan benefits and retirement assets
3, 4
Retirement assets only
4
Near-retiree households re those with  househod reference personged  to , nd  working househod reference person or
working spouse.
Income is househod income before txes in .
Househods current receiving DB pn benefits nd househods with the promise of future DB pn benefits, whether from privte-
sector or government empoers, re counted in this ctegor.
In this figure, retirement ssets incude DC pn ssets ((k), (b), , thrift, nd other DC pns), whether from privte-sector or
government empoers, nd IRAs (trdition, Roth, SEP, SAR-SEP, nd SIMPLE).
Source: Investment Compn Institute tbutions of the  Feder Reserve Bord Surve of Consumer Finnces
103
US RETIREMENT AND EDUCATION SAVINGS
LEARN
MORE
US Househods Hve Accumuted  Significnt Retirement Nest Egg
Empoer-sponsored retirement pns, IRAs (incuding roovers), nd nnuities p n importnt roe
in the US retirement sstem, with ssets ermrked for retirement representing cose to one-third of US
househods’ tot finnci ssets t er-end .
Assets ermrked for retirement mounted to $. triion t er-end  (Figure .)—up percent
from er-end . The rgest components of retirement ssets were IRAs nd empoer-sponsored
DC pns (incuding (k) pns), which together represented percent of  retirement mrket ssets
t er-end . IRAs nd DC pns hd bout hf of their ssets invested in mutu funds t er-end
 (Figure .). In ddition, US househods hd $. triion in vribe nnuit (VA) mutu fund ssets
hed outside retirement ccounts.
FIGURE
8.5
US Retirement Mrket Assets
Trillions of dollars, year-end
Annuities
Federal government DB plans
State and local government DB plans
Private-sector DB plans
Other DC plans
401(k) plans
IRAs
2022 202320212020201520051995
.
.
.
.
.
6.4
34.2
2.2
2.4
2.9
5.4
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
e
.
.
.
.
.
.
.
2.0
e
.
.
.
.
2.8
7.4
38.4
2.4
2.7
3.2
6.0
3.6
e
3.
e
Dt re estimted.
Source: Investment Compn Institute. For  compete ist of sources, see Investment Compn Institute, “The US Retirement Mrket,
Fourth Qurter .”
Retirement Mrket
www.ici.org/reserch/stts/retirement
 INVESTMENT COMPANY FACT BOOK
104
LEARN
MORE
Whie US househods mnge individu ccount-bsed svings (DC pns nd IRAs), trdition DB pns
promise to p benefits in retirement tpic bsed on sr nd ers of service. Some DB pns,
however, do not hve sucient ssets to cover promised benefits tht househods hve  eg right to
expect. Unfunded ibiities re  rger issue for government DB pns thn for privte-sector DB pns.
As of er-end , unfunded ibiities were percent of benefit entitements for stte nd oc
government DB pns, percent of benefit entitements for feder government DB pns, nd percent
of benefit entitements for privte-sector DB pns.
The US Retirement Sstem Produces Robust Income Repcement
in Retirement
In retirement, most Americns mintin spendbe income tht is  highpercentge of the spendbe
income the hd in their te s, ccording to  stud b ICI economists nzing tx dt. The stud,
which foowed Americns who were ged  in  unti the were ged  in , so finds tht
most retirees get substnti mounts of both Soci Securit benefits nd retirement income—tht is,
distributions from empoer-sponsored retirement pns, nnuities, nd IRAs. Indeed, t ever ge through
ge , the tpic individu mintined more thn percent of the intion-djusted spendbe income
the hd, on verge, from ge  through ge . Spendbe income is the income vibe fter ping
txes nd contributing to retirement ccounts.
Lower-income Americns tpic hd higher spendbe income repcement rtes. Individus were
rnked b their verge tot income from ge  to ge  nd spit into  groups, or venties. At ge
, the medin repcement rte for ower-income individus (third ventie) ws percent, for midde-
income individus (th ventie) ws percent, nd for higher-income individus (th ventie) ws
percent (Figure .). A simir pttern b ventie is seen throughout the repcement rte distribution.
At the thpercentie, repcement rtes were we bove percent for ower-income venties. At
the thpercentie, the retionship between repcement rtes nd income ws ess pronounced, with
venties  through   round percent.
Income from Retirement Pns
www.ici.org/reserch/retirement/income
105
US RETIREMENT AND EDUCATION SAVINGS
FIGURE
8.6
Lower-Income Individus Tend to Repce Higher Percentges of Income in
Retirement
Spendable income replacement rate
1
at age 72
0
20
40
60
80
100
120
140
160
180
200
2019181716151413121110987654321
75th percentile
Age 55–59 income rank (ventile)
2
Median
25th percentile
103
93
84
The repcement rte is spendbe income t ge  s  percentge of verge intion-djusted spendbe income between ges 
nd . Spendbe income is the income vibe fter ping txes nd contributing to retirement ccounts. For mrried individus,
spendbe income is per cpit (tht is, spendbe income for the coupe divided b two).
Individus were rnked b their verge tot income from ge  to ge  nd spit into  groups, or venties.
Note: The medin repcement rte for individus in the owest income group ws  percent t ge , nd the th percentie
repcement rte ws  percent. The smpe consists of Americns ged  t er-end  who were ive t er-end  (when
the were ge ).
Source: When I’m 64 (or Thereabouts): Changes in Income from Middle Age to Old Age, vibe t www.ici.org/research/retirement/
income
 INVESTMENT COMPANY FACT BOOK
106
In ddition to Soci Securit benefits, the stud found tht the vst mjorit of Americn retirees hd
income from empoer-sponsored retirement pns, nnuities, nd IRAs. At ge , either direct or
through  spouse, percent received Soci Securit benefits nd percent received retirement income
(Figure .). Ner hf (percent) hd Soci Securit benefits nd retirement income (but no bor
income), nd more thn one-qurter hd  three.
FIGURE
8.7
Most Americns Hd Non–Soci Securit Retirement Income t Age 
Percentage of Americans at age 72
Social Security only
Social Security plus labor
Social Security plus retirement
Social Security plus retirement plus labor
Retirement only
Retirement plus labor
Labor only
Sources of income at age 72
1
16
7
48
26
0.2
0.2
75%
97%
Combinations of labor, Social Security, and retirement income
had retirement
income
had Social
Security benefits
Note: The smpe consists of Americns ged  t er-end  who were ive t er-end  (when the were ge ). Retirement
income is income from DB nd DC pensions, nnuities, nd IRAs. Individus re cssified s hving  given income tpe if the received it
either direct or through  spouse. At ge ,  percent of Americns did not hve bor, Soci Securit, or retirement income.
Source: When I’m 64 (or Thereabouts): Changes in Income from Middle Age to Old Age, vibe t www.ici.org/research/retirement/
income
107
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Defined Contribution Pns P n Incresing Roe in
RetirementSving
DC pns provide empoees with  retirement ccount funded with empoer contributions, empoee
contributions, or both, pus investment ernings or osses on those contributions, ess withdrws.
Assets in empoer-sponsored DC pns hve grown fster thn ssets in DB pns over the pst three
decdes, incresing from ess thn one-third of tot DC nd DB pn ssets in  to ner hf b
er-end .
A Coser Look: (k) Pns Are the Most Common DC Pn
At the end of , empoer-sponsored DC pns—which incude (k) pns, (b) pns,  pns,
the feder Thrift Svings Pn (TSP), nd other privte-sector DC pns—hed n estimted $. triion
in ssets (Figure .). With $. triion in ssets t er-end , (k) pns hed the rgest shre of
empoer-sponsored DC pn ssets; (b) pns—which re simir to (k) pns nd re oered b
some eduction nd nonprofit orgniztions—hed nother $. triion in ssets.
With percent of (k) pn prticipnts in pns oering empoer contributions, (k) pns re 
powerfu sving too (Figure .). DC-owning individus gree tht pro deduction mkes it esier to
sve nd tht the tx tretment of DC pns is  big incentive to contribute. The tpic (k) pn oers 
fu ssortment of investment options gener incuding domestic equit funds, interntion equit funds,
domestic bond funds, nd trget dte funds. Eight-fourpercent of DC-owning individus gree tht their
pn oers  good ineup of investment options.
The BrightScope/ICI Defined Contribution Pn Profie
www.ici.org/reserch/retirement/dc-pn-profie
 INVESTMENT COMPANY FACT BOOK
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US Househod Views on Retirement Sving
www.ici.org/reserch/retirement/us-views
(k) Pn Prticipnts’ Asset Aoction Vries with Prticipnt Age
The vst mjorit of (k) pn prticipnts embrce investing in equities—whether through equit funds,
bnced funds
*
(incuding trget dte funds), or compn stock. According to reserch conducted b ICI
nd the Empoee Benefit Reserch Institute (EBRI), percent of (k) prticipnts hed t est some
equities in their (k) ccounts t er-end  (Figure .).
* The Investment Compn Institute cssifies bnced funds s hybrid in its dt.
FIGURE
8.8
(k) Pns Oer Powerfu nd Convenient Sving nd Investing
(k) pns
 miion ctive prticipnts
$. triion in ssets t er-end 
 percent of (k) pn ssets invested in mutu funds
 investment options, on verge
Tpic incuding domestic equit funds, interntion equit funds, domestic bond funds, nd
trgetdte funds
(k) prticipnts
 percent re oered empoer contributions
 percent hve investments in equities
 percent hve invested in trget dte funds
 percent hve ccess to pn ons
DC-owning individus
 percent gree tht pro deduction mkes it esier for them to sve
 percent gree tht the tx tretment of their retirement pn is  big incentive to contribute
 percent gree tht their empoer-sponsored retirement pn oers them  good ineup of
investmentoptions
Funds incude mutu funds, coective investment trusts, seprte ccounts, nd other pooed investment products.
Equities incude equit funds, compn stock, nd the equit portion of bnced funds. The Investment Compn Institute cssifies
bnced funds s hybrid in its dt.
Sources: Investment Compn Institute, The US Retirement Mrket (www.ici.org/research/stats/retirement); The BrightScope/ICI Defined
Contribution Pn Profie (www.ici.org/research/retirement/dc-plan-profile); EBRI/ICI (k) Dtbse (www.ici.org/research/retirement/
ebri-ici-401k); US Househod Views on Retirement Svings (www.ici.org/research/retirement/us-views)
109
US RETIREMENT AND EDUCATION SAVINGS
The composition of the sset oction of (k) prticipnts’ ccounts so vries with prticipnt ge.
For exmpe, t er-end , (k) pn prticipnts in their twenties hd  much higher oction
to trget dte funds (percent of their (k) pn bnces) thn those in their sixties (percent)
(Figure .). And oder (k) pn prticipnts hd much higher octions to fixed-income investments
(bond funds, GICs nd other stbe vue funds, nd mone funds) compred with ounger (k) pn
prticipnts. A tod, ounger prticipnts octe more of their portfoios to equities compred with oder
prticipnts. At er-end , prticipnts in their twenties hd percent of their (k) ssets invested
in equities, on verge, whie those in their sixties hd percent of their (k) ssets invested in equities.
Furthermore, ounger (k) pn prticipnts were moreike to hve high concentrtions in equities in
their ccounts compred with oder prticipnts.
FIGURE
8.9
Averge (k) Asset Aoction Vries with Prticipnt Age
Average asset allocation of 401(k) account balances, percentage of account balances, year-end 2022
Equity funds
Target date funds
1
Non–target date
balanced funds
2
Bond funds
Money funds
GICs and other
stable value funds
Company stock
Other
Memo: equities
3
Participants in their twenties
Participants in their sixties
26.3
36.3
65.6
32.0
1.7
3.5
2.4
10.1
0.2
1.0
2.0
12.2
1.2
3.3
0.5
1.6
89.5
57.0
A trget dte fund tpic rebnces its portfoio to become ess focused on growth nd more focused on income s it pproches
nd psses the trget dte of the fund, which is usu incuded in the fund’s nme.
The Investment Compn Institute cssifies bnced funds s hybrid in its dt.
Equities incude equit funds, compn stock, nd the equit portion of bnced funds.
Note: Funds incude mutu funds, bnk coective trusts, ife insurnce seprte ccounts, nd n pooed investment product
primri invested in the securit indicted. Percentges re dor-weighted verges.
Source: Tbutions from EBRI/ICI Prticipnt-Directed Retirement Pn Dt Coection Project. See ICI Research Perspective,
“(k)Pn Asset Aoction, Account Bnces, nd Lon Activit in .”
 INVESTMENT COMPANY FACT BOOK
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Trget Dte Funds Are Wide Avibe nd Frequent Used
A trget dte fund foows  predetermined reoction of ssets over time bsed on  specified trget
retirement dte. Tpic, the fund rebnces its portfoio to become ess focused on growth nd
more focused on income s it pproches nd psses the trget dte, which is usu indicted in the
fund’snme.
The oering nd use of trget dte funds in (k) pns hve incresed in recent ers. Trget dte
funds (incuding trget dte mutu funds, trget dte coective investment trusts (CITs), nd other pooed
trget dte investments) hve risen from percent of (k) pn ssets t er-end  to percent
t er-end  (Figure .). Prticipnt use of trget dte funds hs so incresed—t er-end 
ner seven in  (k) pn prticipnts hed trget dte funds.
FIGURE
8.10
Trget Dte Funds’ Rising (k) Mrket Shre
Percentage of total 401(k) market, year-end
70
74
26
45
8
16
77
88
56
68
25
38
2022
2017
2012
2007
Target date
fund assets
Participants holding
target date funds
Participants in plans oering
target date funds
Note: A trget dte fund tpic rebnces its portfoio to become ess focused on growth nd more focused on income s it pproches
nd psses the trget dte of the fund, which is usu incuded in the fund’s nme. Funds incude mutu funds, bnk coective trusts, ife
insurnce seprte ccounts, nd other pooed investment products.
Source: Tbutions from EBRI/ICI Prticipnt-Directed Retirement Pn Dt Coection Project. See ICI Research Perspective, “(k) Pn
Asset Aoction, Account Bnces, nd Lon Activit in .”
Defined Contribution Pn Prticipnts’ Activities
www.ici.org/reserch/retirement/dc-pn-ctivities
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(k) Pn Lons Cn Oer  Sfet Vve in Times of Need
Most (k) pn prticipnts do not borrow from their pns, though the mjorit hve ccess to pn
ons. Thepercentge of (k) pn prticipnts with ons outstnding hs been trending down in the
wke of chnges to pn rues regrding hrdship withdrws since  nd speci COVID-reted
ccess during . According to the ICI Surve of DC Pn Recordkeepers, on percent of DC
pn prticipnts hd ons outstnding t er-end . Ansis of EBRI/ICI (k) dt finds tht
outstnding on bnces mong prticipnts with ons verged percent of the remining (k)
ccount bnce t er-end . And US Deprtment of Lbor dt indicte tht outstnding on
mounts were ess thn percent of (k) pn ssets in .
IRAs Are  Significnt Prt of US Retirement Svings
IRA ssets toted $. triion t er-end , ccounting for percent of US retirement mrket
ssets (Figure .). Mutu funds were percent of IRA ssets t er-end  (Figure .). More thn
four in , or  miion, US househods owned IRAs in .
The first tpe of IRA—known s  trdition IRA—ws creted under the Empoee Retirement Income
Securit Act of  (ERISA) nd is the most common tpe of IRA. IRAs provide  workers with 
contributor retirement svings vehice, nd, through roovers, give workers eving jobs  mens to
preserve the tx benefits nd growth opportunities tht empoer-sponsored retirement pns provide.
Roth IRAs, first vibe in , were creted to provide  contributor retirement svings vehice on
n fter-tx bsis, with quified withdrws distributed tx-free. In ddition, poicmkers hve dded
empoer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, nd SIMPLE IRAs) to encourge sm businesses to
provide retirement pns b simpifing the rues ppicbe to tx-quified pns.
Trdition IRA–owning househods ccess  fu rr of investment options, with percent reporting
the hed mutu funds nd percent indicting the hed ETFs in their trdition IRAs (Figure .).
More thn two-thirds of trdition IRA–owning househods hve  strteg to mnge income nd ssets
in retirement. Tpic, these strtegies hve mn components, such s reviewing sset octions,
determining their retirement expenses, deveoping  retirement income pn, setting side emergenc
funds, nd determining when to tke Soci Securit benefits.
Roth IRA–owning househods so ccess  fu rr of investment options, with percent reporting
the hed mutu funds nd percent indicting the hed ETFs in their Roth IRAs (Figure .). Roth
IRA–owning househods skew ounger thn trdition IRA–owning househods.
The Roe of IRAs in US Househods’ Sving for Retirement
www.ici.org/reserch/retirement/roe-of-irs
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FIGURE
8.11
IRAs P n Importnt Roe in US Househods’ Retirement Sving
IRAs
 miion US househods own IRAs
$. triion in ssets t er-end 
 percent of IRA ssets invested in mutu funds
Trdition IRA–owning househods
$. triion in ssets in trdition IRAs
 percent hve mutu funds in their trdition IRAs
 percent hve ETFs in their trdition IRAs
 percent hve roovers from empoer-sponsored retirement pns in their trdition IRAs
The three most common primr resons for roing over were:
 percent not wnting to eve ssets behind t the former empoer
 percent wnting to consoidte ssets
 percent wnting more investment options
 percent hve  strteg to mnge income nd ssets in retirement
 ers od is their medin ge
Roth IRA–owning househods
$. triion in ssets in Roth IRAs
 percent hve mutu funds in their Roth IRAs
 percent hve ETFs in their Roth IRAs
 percent hve  strteg to mnge income nd ssets in retirement
 ers od is their medin ge
Sources: Investment Compn Institute, The US Retirement Mrket (www.ici.org/research/stats/retirement); The Roe of IRAs in US
Househods’ Sving for Retirement (www.ici.org/research/retirement/role-of-iras)
The IRA Investor Dtbse™
www.ici.org/reserch/retirement/ir-investor-dtbse
113
US RETIREMENT AND EDUCATION SAVINGS
Ansis of the IRA Investor Dtbse—which contins informtion on miions of IRA investors—finds
tht contributions re more importnt for opening new Roth IRAs, whie roovers re more importnt for
opening new trdition IRAs. In , percent of new Roth IRAs were opened soe with contributions,
whie percent of new trdition IRAs were opened on with roovers (Figure .).
FIGURE
8.12
New Roth IRAs Are Often Opened with Contributions; New Trdition IRAs Are
Often Opened with Roovers
Percentage of new IRAs opened in 2020 by type of IRA
New traditional IRAsNew Roth IRAs
Combination of activities
Contribution only
Conversion only
Rollover only
11
7
77
5
74
20
6
Note: New IRAs re ccounts tht did not exist in The IRA Investor Dtbse in  nd were opened b one of the pths indicted in
. The ccution excudes IRAs tht chnged finnci services firms. The smpes re . miion new Roth IRA investors ged  or
oder t er-end  nd . miion new trdition IRA investors ged  to  t er-end .
Source: The IRA Investor Dtbse™
 INVESTMENT COMPANY FACT BOOK
114
Trdition IRA–owning househods gener reserched the decision to ro over mone from their former
empoers’ retirement pns into trdition IRAs. Trdition IRA–owning househods with roovers cite
mutipe resons for roing over their retirement pn ssets into trdition IRAs. The three most common
primr resons for roing over were not wnting to eve ssets behind t the former empoer, wnting
to consoidte ssets, nd wnting more investment options (Figure .).
IRA Portfoios Often Rech Towrd Equit Investments
As with (k) pn ssets,  mjorit of IRA ssets is invested in equities, nd ounger IRA investors
tend to hve  rger shre of their ssets invested in equities, equit funds, nd trget dte funds thn
oder investors. Oder IRA investors tend to be more invested in bonds, bond funds, nd non–trget dte
bnced funds (Figure .). Roth IRA investors disp  simir pttern of investing b ge compred
with trdition IRA investors, though in  ge groups, Roth IRA investors tended to hve higher
octions to equities nd equit funds nd ower octions to bonds nd bond funds.
115
US RETIREMENT AND EDUCATION SAVINGS
FIGURE
8.13
Averge IRA Asset Aoction Vries with Investor Age
Average asset allocation of IRA balances, percentage of assets, year-end 2020
Investors in their sixties
Investors in their thirties
52.9
59.8
8.7
23.7
13.5
6.3
18.6
4.1
5.8
3.6
0.4
2.5
Investors in their sixties
Investors in their thirties
68.8
65.7
6.4
24.3
12.6
6.3
8.4
2.3
3.7
1.2
0.1
0.2
Roth IRA investors
Traditional IRA investors
Other investments
1
Money market funds
Bonds and bond funds²
Non–target date balanced funds³
Target date funds⁴
Equities and equity funds⁵
Other investments incudes certifictes of deposit nd unidentifibe ssets.
Bond funds incude bond mutu funds, bond cosed-end funds, nd bond ETFs.
The Investment Compn Institute cssifies bnced funds s hybrid in its dt.
A trget dte fund tpic rebnces its portfoio to become ess focused on growth nd more focused on income s it pproches nd
psses the trget dte of the fund, which is usu incuded in the fund’s nme.
Equit funds incude equit mutu funds, equit cosed-end funds, nd equit ETFs.
Note: Percentges re dor-weighted verges.
Source: The IRA Investor Dtbse™
 INVESTMENT COMPANY FACT BOOK
116
IRA Withdrws Are Rre Unti Required b Lw Lter in Life
Withdrws from IRAs tend to occur ter in ife, often to fufi required minimum distributions (RMDs) under
the w. An RMD is ccuted s percentge of the IRA bnce, bsed on remining ife expectnc.
Oder trdition IRA owners gener must withdrw t est the minimum mount ech er, or p
 pent (historic, RMDs begn t ge ½, but this ge hs since incresed to ). In ddition, the
Coronvirus Aid, Reief, nd Economic Securit Act (CARES Act) wived RMDs for .
Withdrw ctivit is ower mong ounger trdition nd Roth IRA investors, ike reted to er
withdrw penties for distributions tken b individus ounger thn ½ (Figure .). Withdrw
ctivit rises for investors in their sixties (where withdrws re gener pent free) nd increses
substnti for trdition IRA investors ged  or oder, ike reted to RMD rues. The percent
of trdition IRA investors ged  or oder tking withdrws in  represents  reduced rte of
withdrw ctivit—compred with percent in —reecting the CARES Act suspension of RMDs in
tht er. The withdrw rte does not increse fter ge  for Roth IRA investors, who re not subject to
RMDs during the owner’s ifetime.
FIGURE
8.14
Roth IRA Investors Rre Tke Withdrws; Trdition IRA Investors Are Hevi
Aected b RMDs
Percentage of IRA investors with withdrawals by type of IRA and investor age, 2020
Roth IRA investors
Traditional IRA investors
3
66
19
60
6
Age of IRA investor
18 to 59
60 to 69
70 or older
Note: The smpes re . miion Roth IRA investors ged  or oder t er-end  nd . miion trdition IRA investors ged  or
oder t er-end .
Source: The IRA Investor Dtbse
™
117
US RETIREMENT AND EDUCATION SAVINGS
FIGURE
8.15
Substnti Amounts of Retirement Mrket Assets Are Invested in Long-Term
Mutu Funds
Billions of dollars, year-end 2023
IRAsDC plans Other investor
accounts
VAs outside
retirement accounts
Equity, hybrid, and bond mutual funds (total $19,600 billion)
Money market funds (total $5,919 billion)
7,218
1,264
5,261
5,858
5,127
34
559
199
Type of mutual fund investor account
Source: Investment Compn Institute. See Investment Compn Institute, “The US Retirement Mrket, Fourth Qurter .”
The Roe of Mutu Funds in Retirement Svings
Mutu funds p  mjor roe in empoer-sponsored DC pns (such s (k) pns) nd IRAs. At
er-end , mutu funds ccounted for percent of DC pn ssets nd percent of IRA ssets
(Figures. nd .). Investors hed sight more mutu fund ssets in DC pns ($. triion) thn in
IRAs ($. triion) (Figure .).
Mutu fund ssets hed in DC pns nd IRAs represent  rge shre of mutu fund ssets over, nd
ong-term mutu fund ssets in prticur (Figure .). The $. triion in mutu fund retirement ssets
mde up percent of  mutu fund ssets t er-end . DC pns nd IRAs hed percent of
equit, hbrid, nd bond mutu fund ssets, but on percent of mone mrket fund ssets. Another
$. triion hed in VA mutu funds outside retirement ccounts represented nother percent of
ong-term mutu fund ssets.
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Mutu Funds Aso P  Roe in Eduction Svings
Twevepercent of househods tht owned mutu funds in  cited eduction s  finnci
go for their fund investments (see Figure .), nd percent of mutu fund–owning
househods hve  pns. Nevertheess, the demnd for eduction svings vehices hs
been moderte since their introduction in the s, prt becuse of their imited vibiit
nd prt due to investors’ ck of fmiirit with them. The Economic Growth nd Tx Reief
Reconciition Act of  (EGTRRA) enhnced the ttrctiveness of two eduction svings
vehices—Section  pns nd Coverde eduction svings ccounts (ESAs)—b mking them
more exibe nd owing rger contributions. The  Pension Protection Act (PPA) mde the
EGTRRA enhncements permnent. The Tx Reief, Unempoment Insurnce Reuthoriztion,
nd Job Cretion Act of  extended the EGTRRA enhncements to Coverde ESAs for two
ers; the Americn Txper Reief Act of  mde these enhncements permnent. The
Setting Ever Communit Up for Retirement Enhncement Act of  (SECURE Act) expnded
the tpes of eduction costs tht re covered b  pns. The SECURE . Act of 
owed Roth IRA roovers of  imited mount of  pn ssets strting in .
Assets in Section  svings pns were $. biion t er-end , up percent from
er-end . As of er-end , there were . miion  svings pn ccounts, with n
verge ccount size of pproximte $,.
Househods Sving for Coege Tend to Be Younger
In , s  group, househods sving for coege through  pns, Coverde ESAs,
or mutu funds or ETFs hed outside these ccounts tended to be heded b ounger
individus—bout hf (percent) were ounger thn  (Figure .). Heds of househods
sving for coege hd  rnge of eduction ttinment eves. Sixt-fivepercent hd
competed coege, percent hd n ssocite’s degree or some coege experience, nd
percent hd  high schoo dipom or ess. These househods so represented  rnge of
incomes, with percent of househods sving for coege hving househod income of ess thn
$,. Fin, these househods tpic hd chidren (ounger thn ) in the home.
 Pn Progrm Sttistics
www.ici.org/reserch/stts/s
119
US RETIREMENT AND EDUCATION SAVINGS
FIGURE
8.16
Chrcteristics of Househods Sving for Coege
Percentage of US households saving for college,
1
2023
Age of househod surve respondent
Younger thn  
 to  
 to  
 to  
 or oder 
Eduction eve of househod surve respondent
High schoo dipom or ess 
Associte’s degree or some coege 
Competed coege 
Competed grdute schoo 
Househod income
Less thn $, 
$, to $, 
$, to $, 
$, to $, 
$, or more 
Number of chidren in home
None 
One 
Two 
Three or more 
Househods sving for coege re househods tht own eduction svings pns (Coverde ESAs or  pns) or tht sid ping for
eduction ws one of their finnci gos for their mutu funds or ETFs.
Tot reported is househod income before txes in .
The number of chidren reported is chidren ounger thn  iving in the home.
Source: Investment Compn Institute Annu Mutu Fund Shrehoder Trcking Surve
APPENDIX
How US-Registered
Investment Companies
Operate and the Core
Principles Underlying
Their Regulation
IN THIS CHAPTER
 The Origins of Pooed Investing
 Four Princip Securities Lws Govern Investment Compnies
 The Tpes of US Investment Compnies
 The Orgniztion of  Mutu Fund
 Tx Fetures of Mutu Funds
 Core Principes Undering the Regution of US Investment Compnies
APPENDIX A
 INVESTMENT COMPANY FACT BOOK
120
A
121
HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
The Origins of Pooed Investing
The investment compn concept dtes to the te s in Europe, ccording to K. Geert Rouwenhorst in
The Origins of Mutual Funds, when “ Dutch merchnt nd broker…invited subscriptions from investors to
form  trust…to provide n opportunit to diversif for sm investors with imited mens.”
The emergence of “investment pooing” in Engnd in the s brought the concept coser to US shores.
In , the Foreign nd Cooni Government Trust formed in London. This trust resembed the US fund
mode in bsic structure, providing “the investor of moderte mens the sme dvntges s the rge
cpitists...b spreding the investment over  number of dierent stocks.”
Perhps more importnt, the British fund mode estbished  direct ink with US securities mrkets,
heping to finnce the deveopment of the post–Civi Wr US econom. The Scottish Americn Investment
Trust, formed on Februr , , b fund pioneer Robert Feming, invested in the economic potenti
of the United Sttes, chie through Americn rirod bonds. Mn other trusts foowed tht not on
trgeted investment in Americ, but so ed to the introduction of the fund investing concept on US shores
in the te s nd er s.
The first mutu, or open-end, fund ws introduced in Boston in Mrch . The Msschusetts Investors
Trust introduced importnt innovtions to the investment compn concept b estbishing  simpified
cpit structure, continuous oering of shres, the biit to redeem shres rther thn hod them unti
dissoution of the fund, nd  set of cer investment restrictions nd poicies.
The stock mrket crsh of  nd the Gret Depression tht foowed hmpered the growth of pooed
investments unti  succession of ndmrk securities ws—beginning with the Securities Act of 
nd concuding with the Investment Compn Act of —reinvigorted investor confidence. Renewed
investor confidence nd mn innovtions ed to retive sted growth in industr ssets nd the
number of ccounts.
 INVESTMENT COMPANY FACT BOOK
122
Four Princip Securities Lws Govern Investment Compnies
The Investment Compn Act of  Regutes the structure nd opertions of investment
compnies through  combintion of registrtion nd
discosure requirements nd restrictions on d-to-d
opertions. The Investment Compn Act gener requires
the registrtion of  investment compnies with more
thn  investors. Among other things, the ct ddresses
investment compn cpit structures, custod of ssets,
investment ctivities (prticur with respect to trnsctions
with ites nd other trnsctions invoving potenti
conicts of interest), nd the duties of fund bords.
The Investment Advisers Act of  Regutes investment dvisers. The Advisers Act requires
 dvisers to registered investment compnies nd other
rge dvisers to register with the Securities nd Exchnge
Commission (SEC). The ct so contins provisions requiring
fund dvisers to meet recordkeeping, custodi, reporting,
nd other regutor responsibiities.
The Securities Exchnge Act of  Regutes the trding, purchse, nd se of securities,
incuding investment compn shres. The  Act so
regutes broker-deers, incuding investment compn
princip underwriters nd others tht se investment
compn shres, nd requires them to register with the
SEC. In , the ct ws revised to dd Section A, which
uthorized the SEC to crete sef-regutor orgniztions.
Pursunt to this uthorit, in   sef-regutor
orgniztion for broker-deers—which is now known s
the Finnci Industr Regutor Authorit (FINRA)—ws
creted. Through its rues, inspections, nd enforcement
ctivities, FINRA, with oversight b the SEC, continues to
regute the conduct of broker-deers, thereb dding
nother er of protection for investors.
The Securities Act of  Requires the registrtion of pubic oerings of securities—
incuding investment compn shres—nd regutes such
oerings. The  Act so requires tht  investors
receive  current prospectus describing the fund.
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HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
The Tpes of US Investment Compnies
Fund sponsors in the United Sttes oer four min tpes of registered investment compnies: mutu funds,
cosed-end funds (CEFs), exchnge-trded funds (ETFs), nd unit investment trusts (UITs).
The mjorit of investment compn ssets re hed in mutu funds. Mutu funds cn hve ctive
mnged portfoios, in which  profession investment dviser cretes  unique mix of investments to
meet  prticur investment objective, or pssive mnged portfoios, in which the dviser seeks to
trck the performnce of  seected benchmrk or index. One hmrk of mutu funds is tht the issue
redeembe securities, mening tht the fund stnds red to bu bck its shres t their next computed
net sset vue (NAV). The NAV is ccuted b dividing the tot mrket vue of the fund’s ssets, minus
its ibiities, b the number of mutu fund shres outstnding.
Mone mrket funds re one tpe of mutu fund. The oer investors  vriet of fetures, incuding
iquidit,  mrket-bsed rte of return, nd the go of returning princip,  t  resonbe cost.
These funds, which re tpic pubic oered to  tpes of investors, re registered investment
compnies tht re reguted b the Securities nd Exchnge Commission (SEC) under US feder
securities ws, incuding Rue - under the Investment Compn Act. Tht rue contins numerous
risk-imiting conditions concerning portfoio mturit, quit, diversifiction, nd iquidit.
*
Since October
, institution prime mone mrket funds (funds tht primri invest in corporte debt securities)
nd institution municip mone mrket funds mintin  oting NAV for trnsctions bsed on the
current mrket vue of the securities in their portfoios. Government mone mrket funds nd reti mone
mrket funds (funds designed to imit  benefici owners of the funds to ntur persons) re owed to
use the mortized cost method of pricing or penn rounding—or both—to seek to mintin  stbe shre
price. Mone mrket funds’ bords of directors so hve the biit to impose iquidit fees in certin
circumstnces.
Unike mutu funds, CEFs do not issue redeembe shres. Historic, the vst mjorit of CEFs hve
been “isted” CEFs—investment compnies tht issue  fixed number of common shres in n initi pubic
oering (IPO) tht re pubic trded on n exchnge or in the over-the-counter mrket, ike trdition
stocks. Once issued, shrehoders m not redeem those shres direct to the fund (though some CEFs
m repurchse shres through stock repurchse progrms or through  tender for shres). Investors in
isted CEFs bu or se shres through  broker, just s the woud trde the shres of n pubic trded
compn. Subsequent issunce of common shres gener on occurs through secondr or foow-on
oerings, t-the-mrket oerings, rights oerings, or dividend reinvestments.
There re so “unisted” CEFs, which hve recent seen sted sset growth. Unisted CEFs re not
isted on n exchnge but re sod pubic to reti investors, min through intermediries, or to
certin quified investors through privte pcement oerings. Unike isted CEFs, unisted CEFs do not
issue  fixed number of shres but re permitted to continuous oer their shres t net sset vue
(NAV) foowing their IPO. As the re not trded on n exchnge, unisted CEFs engge in schedued
repurchses or tender oers for  certin percentge of the CEF’s shres to ow shrehoders to exit the
fund. The biit of  shrehoder to exit the CEF is dependent on the timing of the schedued repurchse
or tender oer nd whether the repurchse or tender is “over-subscribed.” For more informtion on CEFs,
see chpter .
* On Ju , , the SEC dopted  number of mendments to Rue -.
 INVESTMENT COMPANY FACT BOOK
124
ETFs re  hbrid of investment compnies. The re structured nd eg cssified s open-end
mngement investment compnies or UITs (discussed beow) but trde intrd on stock exchnges ike
isted CEFs. ETFs on bu nd se fund shres direct with uthorized prticipnts in rge bocks, often
, shres or more. For more informtion on ETFs, see chpter .
UITs re so  hbrid, with some chrcteristics of mutu funds nd some of CEFs. Like isted CEFs, UITs
historic issued on  specific, fixed number of shres, ced units. Like mutu funds, the units re
redeembe; but unike mutu funds, gener the UIT sponsor wi mintin  secondr mrket in the
units so tht redemptions do not depete the UIT’s ssets. A UIT does not ctive trde its investment
portfoio—insted it bus nd hods  set of prticur investments unti  set termintion dte, t which
time the trust is dissoved nd proceeds re pid to shrehoders. For more informtion, see chpter .
The Orgniztion of  Mutu Fund
A mutu fund tpic is orgnized under stte w either s  corportion or  business trust (sometimes
ced  sttutor trust). The three most popur forms of orgniztion re Msschusetts business trusts,
Mrnd corportions, nd Dewre sttutor trusts (Figure A.).*
Historic, Msschusetts business trusts were the most popur—in prt becuse the ver first mutu
fund ws formed s  Msschusetts business trust. This ws  common form of orgniztion t the
time for poos tht invested in re estte or pubic utiities, nd it provided  mode for others to foow.
Deveopments in the te s gve sset mngement compnies other ttrctive choices, nd since
then, the percentge of funds orgnized s Msschusetts business trusts hs decined s more nd
more funds hve formed s Mrnd corportions nd Dewre sttutor trusts. For exmpe, in ,
Mrnd revised its w to ign it with interprettions of the Investment Compn Act concerning when
funds re required to hod nnu meetings. As  resut, Mrnd corportions becme more competitive
with the Msschusetts business trust s  form of orgniztion for mutu funds. In , Dewre—
red  popur domicie for US corportions—dopted new sttutor provisions devoted specific
to business trusts (since renmed sttutor trusts). Benefits, such s mngement of the trust nd imited
ibiit orded to the trust’s benefici owners, hve ed to Dewre sttutor trusts being the most
fvored form of mutu fund orgniztion.
Mutu funds hve ocers nd directors (if the fund is  corportion) or trustees (if the fund is  business
trust).† The fund’s bord ps n importnt roe in overseeing fund opertions, described in more deti on
p ge .
* At er-end ,  percent of mutu funds chose other forms of orgniztion, such s imited ibiit prtnerships, or other
domicies, such s Ohio or Wisconsin.
† For ese of reference, this ppendix refers to  directors nd trustees s directors nd  bords s boards of directors.
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HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
Unike other compnies,  mutu fund is tpic extern mnged; it is not n operting compn nd
hs no empoees in the trdition sense. Insted,  fund reies upon third prties or service providers—
either ited orgniztions or independent contrctors—to invest fund ssets nd crr out other
business ctivities. Figure A. shows the primr tpes of service providers funds usu re upon.
FIGURE
A.1
The Most Popur Forms of Mutu Fund Orgniztion
Percentage of funds, year-end 2023
6%
Other
36%
Massachusetts business trusts
43%
Delaware statutory trusts
15%
Maryland corporations
Number of funds: 8,992
Note: Dt incude mutu funds tht do not report sttistic informtion to the Investment Compn Institute nd mutu funds tht
invest primri in other mutu funds.
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Athough it tpic hs no empoees,  fund is required b w to hve written compince poicies nd
procedures tht govern the opertions of the fund nd the fund’s dministrtor, investment dviser, trnsfer
gent, nd princip underwriter, nd tht re resonb designed to ensure the fund’s compince with
the feder securities ws. A funds must so hve  chief compince ocer (CCO), whose ppointment
must be pproved b the fund’s bord (or princip underwriter or depositor, if  UIT) nd who must
nnu produce  report for the bord (or princip underwriter or depositor) regrding the dequc of
the fund’s compince poicies nd procedures, the eectiveness of their impementtion, nd n mteri
compince mtters tht hve risen.
Fund Bords
A fund bord represents the interests of the fund’s shrehoders b overseeing the mngement nd
opertions of the fund, incuding the fund’s contrctu rrngements with its service providers. For more
informtion on fund bords, see pge .
Shrehoders
Like shrehoders of other compnies, mutu fund shrehoders hve specific voting rights. These incude
the right to eect directors t meetings ced for tht purpose nd the right to pprove mteri chnges
in the terms of  fund’s contrct with its investment dviser, the entit tht mnges the fund’s ssets. For
exmpe,  fund’s mngement fee cnnot be incresed uness  mjorit of shrehoders vote to pprove
the increse.
FIGURE
A.2
Orgniztion of  Mutu Fund
Shareholders
Fund
Sponsor/
Investment
adviser
Independent
public
accountant
Custodian Transfer agent
Principal
underwriter
Administrator
Board of directors
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HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
Sponsors
Setting up  mutu fund is  compicted process performed b the fund’s sponsor, which is tpic
the fund’s investment dviser. The fund sponsor hs  vriet of responsibiities. For exmpe, it must
ssembe the group of third prties needed to unch the fund, incuding the persons or entities chrged
with mnging nd operting the fund. The sponsor provides ocers nd ited directors to oversee the
fund nd recruits united persons to serve s independent directors.
Some of the mjor steps in the process of strting  mutu fund incude orgnizing the fund under stte
w, registering the fund with the SEC s n investment compn pursunt to the Investment Compn
Act, nd registering the oering of fund shres for se to the pubic pursunt to the Securities Act of
.* Uness the ses of shres in  prticur stte quif for n exemption, the fund so must
mke fiings nd p fees to those sttes in which the fund’s shres wi be oered to the pubic. The
Investment Compn Act so requires tht ech new fund hve t est $, of seed cpit before
distributing its shres to the pubic; this cpit is usu contributed b the sponsor or dviser in the
form of n initi investment.
Advisers
Investment dvisers hve over responsibiit for directing the fund’s investments nd hnding its
business irs. The investment dvisers hve their own empoees, incuding investment professions
who work on behf of the fund’s shrehoders nd determine which securities to bu nd se in the fund’s
portfoio, consistent with the fund’s investment objectives nd poicies. In ddition to mnging the fund’s
portfoio, the dviser often serves s dministrtor to the fund, providing vrious “bck-oce” services.
As noted erier,  fund’s investment dviser is often the fund’s initi sponsor nd its initi shrehoder
through the seed mone invested to crete the fund.
To protect investors,  fund’s investment dviser nd the dviser’s empoees re subject to numerous
stndrds nd eg restrictions, incuding restrictions on trnsctions tht m pose conicts of interest.
Like  mutu fund, investment dvisers re required to hve their own written compince progrms
tht re overseen b CCOs nd estbish detied procedures nd intern contros designed to ensure
compince with  reevnt ws nd regutions.
Administrtors
A fund’s dministrtor hndes the mn bck-oce functions for  fund. For exmpe, dministrtors
often provide oce spce, ceric nd fund ccounting services, dt processing, bookkeeping,
nd intern uditing; the so m prepre nd fie SEC, tx, shrehoder, nd other reports. Fund
dministrtors so hep mintin compince procedures nd intern contros, subject to oversight b
the fund’s bord nd CCO.
Princip Underwriters
Investors bu nd redeem fund shres either direct through  fund’s trnsfer gent or indirect
through  broker-deer tht is uthorized to se fund shres. In order to oer  prticur fund’s shres,
however,  broker-deer must hve  ses greement with the fund. The roe of  fund’s princip
* For more informtion on the requirements for the initi registrtion of  mutu fund, see the SEC’s Investment Compn
Registrtion nd Regution Pckge, vibe t www.sec.gov/divisions/investment/invcoreg121504.htm.
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underwriter is to ct s the gent for the fund in executing ses greements tht uthorize broker-deers
to oer for se nd se fund shres. Though princip underwriters must register under the Securities
Exchnge Act of  s broker-deers, the () do not operte s fu-service broker-deers, () tpic
re not invoved in oering or seing fund shres to reti investors, nd () do not estbish or mintin
ccounts for reti investors.
Trnsfer Agents
Mutu funds nd their shrehoders re on the services of trnsfer gents to mintin records of
shrehoder ccounts; ccute nd distribute dividends nd cpit gins; nd prepre nd mi
shrehoder ccount sttements, feder income tx informtion, nd other shrehoder notices. Some
trnsfer gents soprepre nd mi sttements confirming shrehoder trnsctions nd ccount
bnces. Addition, them mintin customer service deprtments, incuding c centers, to
respond to shrehoder inquiries.
Auditors
Auditors certif the fund’s finnci sttements. The uditors’ oversight roe is described more fu on
pge.
Tpes of Mutu Fund Compexes
A vriet of finnci services compnies oer registered funds in the United Sttes. At er-end ,
 percent of investment compn compexes were independent funddvisers (Figure A.), mnging
percent of investment compn ssets. Other tpes of investment compn compexes in the
USmrket incude non-US fund dvisers, insurnce compnies, bnks, thrifts, nd brokerge firms.
FIGURE
A.3
 Percent of Fund Compexes Were Independent Fund Advisers
Percentage of investment company complexes by type of intermediary, year-end 2023
5%
Insurance companies
80%
Independent fund advisers
5%
Banks or thrifts
8%
Non-US fund advisers
2%
Brokerage firms
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HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
Tx Fetures of Mutu Funds
Mutu funds re subject to speci tx rues set forth in subchpter M of the Intern Revenue Code. Unike
most corportions, mutu funds re not subject to txtion on their income or cpit gins t the entit
eve, provided tht the meet certin gross income nd sset requirements nd distribute their income
nnu.
To quif s  reguted investment compn (RIC) under subchpter M, t est  percent of  mutu
fund’s gross income must be derived from certin sources, incuding dividends, interest, pments with
respect to securities ons, nd gins from the se or other disposition of stock, securities, or foreign
currencies. In ddition, t the cose of ech qurter of the fund’s txbe er, t est  percent of the
vue of the fund’s tot net ssets must consist of csh, csh items, government securities, securities of
other funds, nd investments in other securities tht, with respect to n one issuer, represent neither more
thn  percent of the ssets of the fund nor more thn  percent of the voting securities of the issuer.
Further, no more thn  percent of the fund’s ssets m be invested in the securities of n one issuer
(other thn government securities or the securities of other funds), the securities (other thn the securities
of other funds) of two or more issuers tht the fund contros nd tht re engged in simir trdes or
businesses, or the securities of one or more quified pubic trded prtnerships.
If  mutu fund stisfies the gross income nd sset tests nd thus quifies s  RIC, the fund is eigibe
for the tx tretment provided b subchpter M, incuding the biit to deduct from its txbe income the
dividends it ps to shrehoders, provided tht the RIC distributes t est percent of its income (other
thn net cpit gins) ech er. A RIC m retin up to  percent of its income nd  cpit gins, but
the retined income nd cpit gins re txed t regur corporte tx rtes. Therefore, mutu funds
gener distribute , or ner , of their income nd cpit gins ech er.
The Intern Revenue Code so imposes n excise tx on RICs, uness  RIC distributes b December 
t est  percent of its ordinr income erned during the cendr er, .percent of its net cpit
gins erned during the -month period ending on October  of the cendr er, nd  percent of
n previous undistributed mounts. Mutu funds tpic seek to void this chrge—imposed t  
percent rte on the under-distributed mount—b mking the required minimum distribution ech er.
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Mutu Fund Assets b Tx Sttus
Fund investors re responsibe for ping tx on the mount of  fund’s ernings nd gins distributed to
them, whether the receive the distributions in csh or reinvest them in ddition fund shres. Investors
often ttempt to essen the impct of txes on their investments b investing in tx-exempt funds nd tx-
dvntged retirement ccounts nd vribe nnuities. As of er-end ,  percent of  mutu fund
ssets were hed in tx-exempt funds nd percent were invested in tx-dvntged ccounts hed b
househods (Figure A.).
FIGURE
A.4
The Mjorit of Mutu Fund Tot Net Assets Were Hed in Tx-Advntged
Accounts nd Tx-Exempt Funds
Percentage of total net assets, year-end 2023
12%
Taxable nonhousehold accounts
52%
Tax-advantaged household accounts
33%
Taxable household accounts
3%
Tax-exempt funds
Mutual fund total net assets: $25.5 trillion
Tpes of Distributions
Mutu funds mke two tpes of txbe distributions to shrehoders: ordinr dividends nd cpit
gins.
Ordinr dividend distributions come primri from the interest nd dividends erned b the securities in
 fund’s portfoio nd net short-term gins, if n, fter expenses re pid b the fund. These distributions
must be reported s dividends on  US investor’s tx return nd re txed t the investor’s ordinr income
tx rte, uness the re quified dividends. Quified dividend income is txed t  mximum rte of
percent. Some dividends pid b mutu funds m quif for these ower top tx rtes.
Long-term cpit gins distributions represent  fund’s net gins, if n, from the se of securities hed in
its portfoio for more thn one er. Long-term cpit gins re txed t  mximum rte of  percent.
Certin high-income individus so re subject to  . percent tx on net investment income (NII). The
tx on NII ppies to interest, dividends, nd net cpit gins, incuding those received from  mutu fund.
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HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
Non-US investors m be subject to US withhoding nd estte txes nd certin US tx reporting
requirements on investments in US funds. Amounts distributed to non-US investors tht re designted s
interest-reted dividends or dividends deriving from cpit gins wi gener be eigibe for exemption
from US withhoding tx. Other distributions tht re treted s ordinr dividends wi gener be subject
to US withhoding tx (t   percent rte or ower tret rte).
To hep mutu fund shrehoders understnd the impct of txes on the returns generted b their
investments, the SEC requires mutu funds to discose stndrdized fter-tx returns for one-, five-,
nd -er periods. After-tx returns, which ccompn before-tx returns in fund prospectuses, re
presented in two ws:
■
After txes on fund distributions on (preiquidtion)
■
After txes on fund distributions nd n ssumed redemption of fund shres (postiquidtion)
Tpes of Txbe Shrehoder Trnsctions
An investor who ses mutu fund shres usu incurs  cpit gin or oss in the er the shres re
sod; n exchnge of shres between funds in the sme fund fmi so usu resuts in either  cpit
gin or oss.
Investors re ibe for tx on n cpit gin rising from the se of fund shres, just s the woud be
if the sod  stock, bond, or other securit. Cpit osses from mutu fund shre ses nd exchnges,
ike cpit osses from other investments, m be used to oset other cpit gins in the current er
nd therefter. In ddition, up to $, of cpit osses in excess of cpit gins ($, for  mrried
individu fiing  seprte return) m be used to oset ordinr income.
The mount of  shrehoder’s gin or oss on fund shres is determined b the dierence between the
cost bsis of the shres (gener, the purchse price—incuding ses ods—of the shres, whether
cquired with csh or reinvested dividends) nd the se price. Tx rues encted in  require 
brokers nd funds to provide cost bsis informtion to shrehoders, s we s to indicte whether n
gins or osses re ong-term or short-term, for fund shres cquired beginning in . For shres
cquired before , mn funds hve vountri been providing cost bsis informtion to shrehoders
or computing gins nd osses for shres sod.
Tx-Exempt Funds
Tx-exempt bond funds distribute mounts ttributbe to municip bond interest. These “exempt-interest
dividends” re exempt from feder income tx nd, in some cses, stte nd oc txes. Tx-exempt
mone mrket funds invest in short-term municip securities or equivent instruments nd so p
exempt-interest dividends. Even though income from these funds gener is tx-exempt, investors must
report it on their income tx returns. Tx-exempt funds provide investors with this informtion nd tpic
expin how to hnde exempt-interest dividends on  stte-b-stte bsis. For some txpers, portions of
income erned b tx-exempt funds so m be subject to the feder terntive minimum tx.
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Mutu Fund Ordinr Dividend Distributions
Ordinr dividend distributions represent income—primri from interest nd dividends erned b
securities in  fund’s portfoio—fter expenses re pid b the fund. Mutu funds distributed $ biion
in dividends to fund shrehoders in  (Figure A.). Bond nd mone mrket funds ccounted for
percent of  dividend distributions in . Over,  percent of dividend distributions were pid to
tx-dvntged househod ccounts nd tx-exempt fund shrehoders. Another  percent were pid to
txbe househod ccounts.
FIGURE
A.5
Dividend Distributions
Billions of dollars
Yer
Tx-dvntged
househod ccounts nd
tx-exempt funds
Txbe
househod
ccounts
Txbe
nonhousehod
ccounts Tot
 $ $ $ $
    
    
    
    
    
    
    
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HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
Mutu Fund Cpit Gins Distributions
Cpit gins distributions represent  fund’s net gins, if n, from the se of securities hed in its portfoio.
When gins from these ses exceed osses, the re distributed to fund shrehoders. Mutu funds
distributed $ biion in cpit gins to shrehoders in — percent of these distributions were
pid to tx-dvntged househod ccounts, nd  percent were pid to txbe househod ccounts nd
tx-exempt fund shrehoders (Figure A.).* Equit mutu funds tpic represent the buk of cpit gins
distributions. In , percent of equit mutu fund shre csses mde  cpit gins distribution, nd
 percent of these shre csses distributed more thn . percent of their ssets s cpit gins.
* On the net gins from the se of  fund’s ssets hed for more thn one er (ong-term cpit gin distributions) re txed s cpit
gins. Net short-term gins re txed s ordinr dividend distributions. Dt presented here on cpit gins distributions incude both
ong-term nd short-term cpit gins.
FIGURE
A.6
Cpit Gins Distributions
Billions of dollars
Yer
Tx-dvntged
househod
ccounts
Txbe
househod ccounts
nd tx-exempt funds
Txbe
nonhousehod
ccounts Tot
 $ $ $ $
   
   
    
    
    
    
*   
* In , tx-exempt funds distributed ess thn $ miion in cpit gins.
Note: Cpit gins distributions incude ong-term nd short-term cpit gins.
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134
Core Principes Undering the Regution of US Investment
Compnies
Embedded in the structure nd regution of mutu funds nd other registered investment compnies re
sever core principes tht provide importnt protections for shrehoders.
Trnsprenc
Funds re subject to more extensive discosure requirements thn n other comprbe finnci product,
such s hedge funds nd other privte poos. The cornerstone of the discosure regime for mutu funds
nd ETFs is the prospectus.* Mutu funds nd ETFs re required to mintin  current prospectus,
which provides investors with informtion bout the fund, incuding its investment objectives, investment
strtegies, risks, fees nd expenses, nd performnce, s we s how to purchse, redeem, nd exchnge
fund shres. Importnt, the ke prts of this discosure, with respect to performnce informtion nd
fees nd expenses, re stndrdized to fciitte comprisons b investors. Mutu funds nd ETFs m
provide investors with  summr prospectus contining ke informtion bout the fund whie mking more
informtion vibe onine nd b mi upon request.
Mutu funds nd ETFs re so required to mke sttements of ddition informtion (SAIs) vibe
to investors upon request nd without chrge. The SAI conves informtion bout the fund tht, though
usefu to some investors, is not necessri needed to mke n informed investment decision. For exmpe,
the SAI gener incudes informtion bout the histor of the fund, oers detied discosures on certin
investment poicies (such s borrowing nd concentrtion poicies), nd ists ocers, directors, nd other
persons who contro the fund.
The prospectus, SAI, nd certin other required informtion re contined in the fund’s registrtion
sttement, which is fied eectronic with the SEC nd is pubic vibe vi the SEC’s Eectronic
Dt Gthering, Ansis, nd Retriev (EDGAR) sstem. Mutu fund nd ETF registrtion sttements re
mended t est once  er to ensure tht finnci sttements nd other informtion do not become
ste.† These funds so mend registrtion sttements throughout the er s necessr to reect
mteri chnges to their discosures.
In ddition to the registrtion sttement discosure, funds provide shrehoders with sever other
discosure documents. Funds must trnsmit nnu nd seminnu shrehoder reports within  ds
fter the end nd the midpoint of the fund’s fisc er, respective.
‡
These reports contin performnce
* CEFs nd UITs so provide investors with extensive discosures, but under  sight dierent regime tht reects the w shres
of these funds trde. Both CEFs nd UITs fie n initi registrtion sttement with the SEC contining  prospectus nd other
informtion reted to the initi oering of their shres to the pubic.
† Section ()() of the Securities Act of  prohibits investment compnies tht mke  continuous oering of shres from using 
registrtion sttement with finnci informtion tht is more thn  months od. This gives mutu funds nd ETFs four months fter
the end of their fisc er to mend their registrtion sttements.
‡ Unti Ju , open-end funds m trnsmit  notice to shrehoders indicting tht  new shrehoder report is vibe onine
nd in print b request in ieu of trnsmitting  shrehoder report. The notice must incude  website ddress where the shrehoder
report cn be ccessed nd  to-free teephone number the shrehoder cn use to request  pper cop of the report t no
chrge.
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HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
nd expense informtion, finnci sttements, nd  ist of the fund’s portfoio securities.* An independent
ccountnt must udit the finnci sttements incuded in the nnu shrehoder report. The nnu
shrehoder report for non–mone mrket mutu funds nd most ETFs must so provide mngement’s
discussion of fund performnce (MDFP), describing the fctors tht ected the fund’s performnce,
incuding reevnt mrket conditions nd investment strtegies nd techniques used b the fund’s
investment dviser.†
Funds re so required to fie Form N-PORT with the SEC. Form N-PORT must incude  compete ist of
the fund’s portfoio securities in  structured dt formt ong with other informtion, incuding ows,
returns, securities ending informtion, nd—for funds investing more thn  specified mount in fixed-
income securities—portfoio-eve risk metrics. Funds must fie Form N-PORT for ech month during the
er; however, on the fiing reting to the third month of ech fisc qurter is mde pubic vibe.
These requirements cuse funds to pubic discose their portfoio hodings t est four times ech
fisc er.
‡
Funds must so fie census-tpe informtion nnu on Form N-CEN nd must nnu discose how
the voted on specific prox issues t portfoio compnies on Form N-PX. Funds re the on shrehoders
required to pubic discose ech nd ever prox vote the cst. The re not required to mi Form
N-PORT, Form N-CEN, or Form N-PX to shrehoders, but the forms re pubic vibe vi the SEC’s
EDGAR dtbse.
§
The combintion of prospectuses, SAIs, nnu nd seminnu shrehoder reports, Form N-PORT, Form
N-CEN, nd Form N-PX provides the investing pubic, regutors, medi, nd other interested prties with
fr more informtion on funds thn is vibe for other tpes of investments. This informtion is esi
nd redi vibe from most funds nd the SEC. It is so vibe from privte-sector vendors, such s
Morningstr, tht compie pubic vibe informtion on funds in ws tht might benefit investors.
Di Vution nd Liquidit
Ner  funds oer shrehoders iquidit nd mrket-bsed vution of their investments t est di.
ETFs nd isted CEF shres re trded intrd on stock exchnges t mrket-determined prices, giving
shrehoders re-time iquidit nd pricing. Unisted CEFs engge in schedued repurchses or tender
oers for  certin percentge of the CEF’s shres to ow shrehoders to exit the fund nd re required
to price the current mrket vue of the fund’s portfoio investments in connection with the repurchse
or tender or when oering its shres. Mutu fund shres re redeembe on  di bsis t  price tht
reects the current mrket vue of the fund’s portfoio investments. The vue of ech portfoio investment
* Beginning in Ju , open-end funds must trnsmit to shrehoders  condensed nnu nd seminnu shrehoder report tht
highights ke informtion, incuding cost nd performnce informtion, ke fund sttistics, nd  grphic presenttion of hodings.
The fu finnci sttements nd  ist of the fund’s fu portfoio securities wi move to n esi ccessibe onine site tht the fund
opertes nd must be deivered to shrehoders upon request. Unti Ju ,  fund is permitted to incude  summr portfoio
schedue in its shrehoder reports in ieu of the compete schedue, provided tht the compete portfoio schedue is fied with the
SEC nd provided to shrehoders upon request, free of chrge. The summr portfoio schedue incudes ech of the fund’s 
rgest hodings in united issuers nd ech investment tht exceeds  percent of the fund’s NAV.
† CEFs must so incude n MDFP section in their nnu shrehoder reports.
‡ Mone mrket funds, which red must fie portfoio hodings with the SEC month on Form N-MFP nd discose those hodings
on their websites, re not required to fie Form N-PORT.
§
Agin, on the Form N-PORT fiing reting to the third month of the fisc qurter is mde pubic vibe.
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136
is determined either b  mrket quottion, if one is redi vibe, or t fir vue (i.e., n estimte of
the mount for which the investment coud be sod in  current trnsction). Under the SEC’s fir vue rue,
fir vue for ppicbe portfoio investments m be determined b the fund’s bord or its investment
dviser (subject to continued oversight b the fund’s bord).
The di pricing process is  critic importnt core function tht invoves numerous st of the
investment dviser nd pricing vendors. The fir vution process,  prt of the over pricing process,
receives prticur scrutin from funds, their dvisers, nd their bords of directors, s we s regutors
nd independent uditors. Under SEC rues,  funds must dopt written fir vution poicies nd
procedures nd estbish nd pp methodoogies for determining fir vues in prticur instnces.*
Those methodoogies must be consistent with US gener ccepted ccounting principes (GAAP).
This di vution process resuts in  NAV for the fund. The NAV is the price used for  mutu fund
shre trnsctions occurring tht d—new purchses, ses (redemptions), nd exchnges from one fund
to nother within the sme fund fmi.† It represents the current mrk-to-mrket vue of  the fund’s
ssets, minus ibiities (e.g., ccrued fund expenses pbe), divided b the tot number of outstnding
shres. Mutu funds reese their di NAVs to investors nd others fter the compete the pricing
process, gener round : p.m. estern time. Di fund prices re vibe through fund to-free
teephone services, websites, nd other mens.
The Investment Compn Act requires mutu funds to process trnsctions bsed upon “forwrd pricing,”
mening tht shrehoders receive the next computed NAV foowing the fund’s (or n intermedir’s)
receipt of their trnsction orders. For exmpe, for  fund tht prices its shres s of : p.m.,‡ orders
received before : p.m. receive the NAV determined tht sme d s of : p.m. Orders received
fter : p.m. receive the NAV determined s of : p.m. on the next business d. Forwrd pricing is n
importnt protection for mutu fund shrehoders. It is designed to minimize the biit of shrehoders to
tke dvntge of uctutions in the prices of  fund’s portfoio investments tht occur fter the fund hs
st ccuted its NAV.
When  shrehoder redeems shres in  mutu fund, he or she cn expect to be pid prompt. Mutu
funds m not suspend redemptions of their shres (subject to certin nrrow exceptions)
§
or de
pments of redemption proceeds for more thn seven ds.
* For more informtion on the vution process, see ICI’s Fund Valuation Under the SEC’s New Fair Value Rule (December ),
vibe t www.ici.org/files/2021/21-ppr-fund-valuation-primer.pdf.
† The pricing process is so critic for ETFs, though for sight dierent resons. ETFs operte ike mutu funds with respect to
trnsctions with uthorized prticipnts tht trde with the ETF in rge bocks, often of , shres or more. The NAV is the
price used for these rge trnsctions. Listed CEFs re not required to strike  di NAV, but most do so to provide the mrket with
the biit to ccute the dierence between the fund’s mrket price nd its NAV. Tht dierence is ced the fund’s premium (if the
mrket price is greter thn the NAV) or discount (if the mrket price is ess thn the NAV). Athough n unisted CEF is on required
to price when oering shres or engging is  repurchse or tender, mn price di (nd re required to if continuous oered).
‡ Mutu funds nd ETFs must price their shres t est once ever business d s of  time determined b the fund’s bord. Mn
of these funds price s of : p.m. estern time or when the New York Stock Exchnge coses.
§
Section (e) of the Investment Compn Act prohibits mutu funds nd ETFs from suspending redemptions uness the SEC permits
them to do so or decres n emergenc, or the New York Stock Exchnge coses or restricts trding. These occurrences re
retive rre, though funds hve suspended redemptions on sever occsions, such s during Hurricne Snd in . See
so pge .
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HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
Under the SEC’s iquidit rue, no more thn  percent of  mutu fund’s or ETF’s portfoio m be
invested in iiquid ssets,* in prt to ensure tht the fund cn meet redemption requests. This iquidit rue
nd its reted reporting frmework so impose other iquidit-reted regutor obigtions on these
funds.
Oversight nd Accountbiit
A funds re subject to  strong sstem of oversight from both intern nd extern sources. Bords of
directors, which incude independent directors, nd written compince progrms overseen b CCOs
(see Compince nd Risk Mngement Progrms on pge ) re exmpes of intern oversight
mechnisms. Extern oversight is provided b the SEC, FINRA, nd extern service providers such s
certified pubic ccounting firms.
FUND BOARDS
Mutu funds, CEFs, nd ETFs structured s open-end funds hve bords. The roe of  fund’s bord of
directors is primri one of oversight. The bord of directors tpic is not invoved in the d-to-d
mngement of the fund compn. Insted, d-to-d mngement is hnded b the fund’s investment
dviser or dministrtor pursunt to  contrct with the fund.
Investment compn directors review nd pprove mjor contrcts with service providers (incuding,
notb, the fund’s investment dviser), pprove poicies nd procedures to ensure the fund’s compince
with feder securities ws, nd undertke oversight nd review of the performnce of the fund’s
opertions. Directors devote substnti time nd consider rge mounts of informtion in fufiing these
duties, in prt becuse the must perform  their duties in “n informed nd deiberte mnner.”
Fund bords must mintin  prticur eve of independence. The Investment Compn Act requires
t est  percent of the members of  fund bord to be independent from fund mngement. An
independent director is  fund director who does not hve n significnt business retionship with
 mutu fund’s dviser or underwriter. In prctice, most fund bords hve fr higher percentges of
independent directors. As of er-end , independent directors mde up t est three-qurters of
bords in  percent of fund compexes.†
Independent fund directors p  critic roe in overseeing fund opertions nd re entrusted with
the primr responsibiit for sfegurding the interests of the fund’s shrehoders. The serve s
wtchdogs, furnishing n independent check on the mngement of funds. Like directors of operting
compnies, the hve  fiducir dut to represent the interests of shrehoders. But independent fund
directors so hve specific sttutor nd regutor responsibiities under the Investment Compn
Act beond the duties required of other tpes of directors. Among other things, the oversee the
performnce of the fund, pprove the fees pid to the investment dviser for its services, nd oversee
the fund’s compince progrm.
* Mone mrket funds re hed to dierent iquidit stndrds. For more informtion on this topic, see The Tpes of US Investment
Compnies on pge  nd www.ici.org/mmfs/current/16_mmf_reg_summ.
† See Overview of Fund Governance Practices, 1994–2022 for  description of the stud tht coects dt on this nd other
governnce prctices. Avibe t www.ici.org/files/2023/23-fund-governance-practices.pdf.
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138
COMPLIANCE AND RISK MANAGEMENT PROGRAMS
The bord’s oversight function ws gret enhnced b rues dopted in  tht require ever fund nd
dviser to hve  CCO who dministers  written compince progrm resonb designed to prevent,
detect, nd correct viotions of the feder securities ws. Compince progrms must be reviewed t
est nnu for their dequc nd eectiveness, nd fund CCOs re required to report direct to the
independent directors.
REGULATORY OVERSIGHT
Intern oversight is ccompnied b  number of forms of extern oversight nd ccountbiit. Funds
re subject to inspections, exmintions, nd enforcement b their primr regutor, the SEC. Fund
underwriters nd distributors so re overseen b FINRA,  sef-regutor orgniztion. Funds ited
with  bnk m so be overseen b bnking regutors. A funds re subject to the ntifrud jurisdiction
of ech stte in which the fund’s shres re oered for se or sod.
AUDITORS
A fund’s finnci sttement discosure is so subject to sever intern nd extern checks. For exmpe,
nnu reports incude udited finnci sttements certified b n independent pubic ccounting firm
subject to oversight b the Pubic Compn Accounting Oversight Bord (PCAOB). This prctice ensures
tht the finnci sttements re prepred in conformit with GAAP nd fir present the fund’s finnci
position nd resuts of opertions.
SARBANESOXLEY ACT
Like ocers of pubic compnies, fund ocers must mke certifictions nd discosures required b the
Srbnes-Oxe Act. For exmpe, the hve to certif the ccurc of the fund’s finnci sttements.
ADDITIONAL REGULATION OF ADVISERS
In ddition to the sstem of oversight ppicbe direct to funds, investors enjo protections through SEC
regution of the investment dvisers tht mnge fund portfoios. A dvisers to registered funds re
required to register with the SEC nd re subject to SEC oversight nd discosure requirements. Advisers
so owe  fiducir dut to ech fund the dvise, mening tht the hve  fundment eg obigtion
to ct in the best interests of the fund pursunt to  dut of undivided ot nd utmost good fith.
Limits on Leverge
The inherent nture of  fund— profession mnged poo of ssets owned pro rt b its investors—is
strightforwrd nd esi understood b investors. The Investment Compn Act fosters simpicit b
prohibiting compex cpit structures nd imiting funds’ use of everge.
The Investment Compn Act imposes vrious requirements on the cpit structure of mutu funds, CEFs,
nd ETFs, incuding imittions on the issunce of “senior securities” nd borrowing. These imittions
gret minimize the possibiit tht  fund’s ibiities wi exceed the vue of its ssets.
Gener speking,  senior securit is n debt tht tkes priorit over the fund’s shres, such s  on
or preferred stock. The SEC historic hs interpreted the definition of senior securit brod, finding
tht seing securities short, purchsing securities on mrgin, nd investing in mn tpes of derivtive
instruments, mong other prctices, m crete senior securities.
139
HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
The SEC recent modernized its frmework governing funds’ use of derivtives, permitting mutu
funds, CEFs, nd ETFs to invest in derivtives if the dopt  derivtives risk mngement progrm tht
 fund’s bord oversees nd comp with n outer-bound imit on fund everge risk. Funds tht imit
their derivtives exposure to ess thn  percent of their net ssets wi not need to comp with the
new requirements but wi need to dopt nd impement written poicies nd procedures resonb
designed to mnge the fund‘s derivtives risks. The Investment Compn Act so imits borrowing. With
the exception of certin privte rrnged ons nd temporr ons, n promissor note or other
indebtedness woud gener be considered  prohibited senior securit.* Mutu funds nd ETFs re
permitted to borrow from  bnk if, immedite fter borrowing, the fund’s tot net ssets re t est
three times tot ggregte borrowings. In other words, the fund must hve t est  percent sset
coverge.
CEFs hve  sight dierent set of imittions. The re permitted to issue debt nd preferred stock,
subject to certin conditions, incuding sset coverge requirements of  percent for debt nd 
percent for preferred stock.
In ddition, funds m invest in reverse repurchse greements nd other simir finncing trnsctions
if the tret those investments s borrowings subject to the reevnt sset coverge requirements
ppicbe to open-end funds (mutu funds or ETFs) or CEFs or if the tret such trnsctions s
derivtives investments.
Mn funds vountri impose stricter imittions on their biit to issue senior securities or borrow thn
set forth under the Investment Compn Act. Funds often, for exmpe, dopt  poic stting tht the
wi borrow on s  temporr mesure for extrordinr or emergenc purposes nd not to finnce
investment in securities. In ddition, the m discose tht, in n event, borrowings wi be imited to 
sm percentge of fund ssets (such s  percent). These re meningfu vountr mesures, becuse
under the Investment Compn Act,  fund’s poicies on borrowing mone nd issuing senior securities
cnnot be chnged without the pprov of fund shrehoders.
Custod
To protect fund ssets, the Investment Compn Act requires  funds to mintin strict custod of fund
ssets, seprte from the ssets of the dviser. Athough the ct permits other rrngements,† ner
 funds use  bnk custodin for domestic securities. Foreign securities re required to be hed in the
custod of n interntion foreign bnk or securities depositor.
A fund’s custod greement with  bnk is tpic fr more eborte thn the rrngements used for
other bnk cients. The custodin’s services gener incude sfekeeping nd ccounting for the fund’s
ssets, setting securities trnsctions, receiving dividends nd interest, providing foreign exchnge
services, ping fund expenses, reporting fied trdes, reporting csh trnsctions, monitoring corporte
ctions t portfoio compnies, nd trcing oned securities.
* Temporr ons cnnot exceed  percent of the fund’s tot net ssets nd must be repid within  ds.
† The Investment Compn Act contins six seprte custod rues for the possibe tpes of custod rrngements for mutu funds,
CEFs, nd ETFs. UITs re subject to  seprte rue tht requires the use of  bnk to mintin custod. See Section (f) of the
Investment Compn Act nd SEC Rues f- through f-.
 INVESTMENT COMPANY FACT BOOK
140
The strict rues on the custod nd reconciition of fund ssets re designed to prevent theft nd other
frud-bsed osses. Shrehoders re further insuted from these tpes of osses b  provision in the
Investment Compn Act tht requires  mutu funds to hve fideit bonds designed to protect them
ginst possibe instnces of empoee rcen or embezzement.
Prohibitions on Trnsctions with Aites
The Investment Compn Act contins  number of strong nd detied prohibitions on trnsctions
between the fund nd fund insiders or ited orgniztions (such s the corporte prent of the fund’s
dviser). Mn of these prohibitions were prt of the origin sttutor text of the ct, encted in response
to instnces of overreching nd sef-deing b fund insiders during the s in the purchse nd se
of portfoio securities, ons b funds, nd investments in reted funds. The SEC’s Division of Investment
Mngement hs sid tht “for more thn  ers, [the ited trnsction prohibitions] hve ped 
vit roe in protecting the interests of shrehoders nd in preserving the industr’s reputtion for integrit;
the continue to be mong the most importnt of the ct’s mn protections.”*
Athough  number of prohibitions in the Investment Compn Act rete to ited trnsctions, three
re prticur noteworth:
■
Gener prohibition on direct trnsctions between  fund nd n ite
■
Gener prohibition on “joint trnsctions,” where the fund nd ite re cting together vis--vis 
third prt
■
Restrictions preventing investment bnks from pcing or “dumping” unmrketbe securities with n
ited fund b gener prohibiting the fund from buing securities in n oering sndicted b n
ited investment bnk
* See Protecting Investors: A Half Century of Investment Company Regulation, Report of the Division of Investment Management,
Securities and Exchange Commission (May 1992), vibe t www.sec.gov/divisions/investment/guidance/icreg50-92.pdf.
TheDivision of Investment Mngement is the division within the SEC responsibe for the regution of funds.
141
HOW USREGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION
Diversifiction
Both tx nd securities ws provide diversifiction stndrds for funds registered under the Investment
Compn Act. To quif s RICs under the tx ws,  mutu funds, CEFs, nd ETFs, s we s most
UITs, must meet  tx diversifiction test ever qurter. The eect of this test is tht  fund with  modest
csh position nd no government securities woud hod securities from t est  dierent issuers.
Another tx diversifiction restriction imits the mount of n issuer’s outstnding voting securities tht 
fund m own.
The securities ws set higher stndrds for funds tht eect to be diversified. If  fund eects to be
diversified, the Investment Compn Act requires tht, with respect to t est  percent of the portfoio,
no more thn  percent m be invested in the securities of n one issuer nd no investment m
represent more thn  percent of the outstnding voting securities of n issuer. Diversifiction is not
mndtor, but  mutu funds, CEFs, nd ETFs must discose whether or not the re diversified under
the ct’s stndrds.
In prctice, most funds tht eect to be diversified re much more high diversified thn the need to be to
meet these two tests. As of December , for exmpe, the medin number of stocks hed b US equit
mutu funds ws .*
* This number—ccuted using Morningstr dt—is the medin mong domestic equit mutu funds, excuding sector funds nd
funds of funds.
APPENDIX
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142
APPENDIX B
B
Significant Events
in Fund History

Dutch merchnt nd broker Adrin vn Ketwich invites subscriptions from
investors to form  trust, the Eendrgt Mkt Mgt, with the im of providing
investment diversifiction opportunities to investors ofimited mens.

The Foreign nd Cooni Government Trust, the precursor to the US investment
fund mode, is formed in London. This trust provides “the investor of moderte
mens the sme dvntges s rge cpitists.”

The first mutu funds re estbished in Boston.

The Securities Act of  regutes the registrtion nd oering of new
securities, incuding mutu fund nd cosed-end fund shres, to the pubic.

The Securities Exchnge Act of  uthorizes the Securities nd Exchnge
Commission (SEC) to provide for fir nd equitbe securities mrkets.

The Revenue Act of  estbishes the tx tretment of mutu funds nd their
shrehoders.
Cosed-end funds were covered b the ct in .

The Investment Compn Act of  is signed into w, setting the structure
nd regutor frmework for registered investment compnies.
The forerunner to the Ntion Assocition of Investment Compnies (NAIC) is
formed. The NAIC wi become the Investment Compn Institute.
143
SIGNIFICANT EVENTS IN FUND HISTORY

The NAIC begins coecting investment compn industr sttistics.

The tot number of mutu funds surpsses , nd the number of shrehoder ccounts
exceeds one miion for the first time.
The first mutu fund focusing on non-US investments is mde vibe to US investors.

Househods’ net purchses of fund shres exceed those of corporte stock. NAIC initites 
ntionwide pubic informtion progrm emphsizing the roe of investors in the US econom
nd expining the concept of investment compnies.

The first tx-free unit investment trust is oered.
The NAIC chnges its nme to the Investment Compn Institute (ICI) nd wecomes fund
dvisers nd underwriters s members.

The Sef-Empoed Individus Tx Retirement Act cretes svings opportunities (Keogh pns)
for sef-empoed individus.

Mone mrket funds re introduced.

The Empoee Retirement Income Securit Act of  (ERISA) cretes the individu
retirement ccount (IRA).

The Tx Reform Act of  permits the cretion of municip bond funds. The first reti index
fund is oered.

The Revenue Act of  cretes new Section (k) retirement pns nd simpified
empoee pensions (SEPs).

The Economic Recover Tx Act estbishes “univers” IRAs for  workers. The IRS proposes
regutions for Section (k).

The Tx Reform Act of  reduces IRA deductibiit.

ICI wecomes cosed-end funds s members.

Mutu fund ssets top $ triion.

The first exchnge-trded fund (ETF) shres re issued.
 INVESTMENT COMPANY FACT BOOK
144

Enctment of the Ntion Securities Mrkets Improvement Act of  (NSMIA) provides 
more rtion sstem of stte nd feder regution, giving the SEC excusive jurisdiction for
registering nd reguting mutu funds, exchnge-isted securities, nd rger dvisers. Sttes
retin their ntifrud uthorit nd responsibiit for reguting non-exchnge-isted oerings
nd smer dvisers.
The Sm Business Job Protection Act cretes SIMPLE pns for empoees of sm
businesses.

The Txper Reief Act of  cretes the Roth IRA nd eimintes restrictions on portfoio
mngement tht disdvntge fund shrehoders.

The SEC pproves the most significnt discosure reforms in the histor of US mutu funds,
encompssing “pin Engish,” fund profies, nd improved risk discosure.

The Grmm-Lech-Bie Act modernizes finnci services regution nd enhnces finnci
privc.

Enctment of the Economic Growth nd Tx Reief Reconciition Act of  (EGTRRA)
significnt expnds retirement svings opportunities for miions of working Americns.

The Jobs nd Growth Tx Reief Reconciition Act of  (JGTRRA) provides mutu fund
shrehoders with the fu benefits of ower tx rtes on dividends nd cpit gins.

The Pension Protection Act (PPA) nd the Tx Increse Prevention nd Reconciition Act
provide incentives for investors of  ges to sve more in tx deferred nd txbe investment
ccounts.

The SEC votes to dopt the Summr Prospectus rue.
Reserve Primr Fund fis to mintin $. NAV, becoming the second mone mrket fund in
 ers to “brek the dor.”

The Mone Mrket Working Group,  tsk force of senior industr executives, submits its report
to the ICI bord. The bord endorses the working group’s c for immedite impementtion of
new regutor nd oversight stndrds for mone mrket funds.

The SEC dopts new rues nd mendments to regutions governing mone mrket funds.
In Jones v. Harris, the US Supreme Court unnimous uphods the Grtenberg stndrd under
which courts hve ong considered cims of excessive fund dvisor fees.
Enctment of the RIC Moderniztion Act stremines nd updtes technic tx rues,
benefiting shrehoders b mking funds more ecient.
145
SIGNIFICANT EVENTS IN FUND HISTORY

In Business Roundtable et al. v. SEC, the United Sttes Court of Appes for the District of
Coumbi Circuit vctes the SEC’s prox ccess rue for fiing to dequte evute the
rue’s costs nd benefits.
ICI unches ICI Gob to crr out the Institute’s interntion work b dvncing the
perspective of reguted investment funds gob.

The SEC dopts sweeping chnges to the rues tht govern mone mrket funds, buiding upon
the chnges to mone mrket fund regution dopted b the SEC in .

Congress psses the most significnt tx bi in three decdes. Reecting congression
support for the vountr, empoer-bsed retirement sstem, wmkers reject proposs to
rise revenue b imiting retirement svings tx incentives.

The SEC dopts Rue e-, permitting US-registered funds to deiver shrehoder reports
onine to stisf their fund discosure obigtions.

The SEC dopts Rue c-, known s the ETF rue, fin enbing most ETFs to operte
under the Investment Compn Act of  without hving to pp for exemptive reief.
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The SEC provides reief mesures to funds to nvigte opertion chenges during the
COVID- pndemic.
The SEC dopts Rue f- nd reted mendments modernizing regutions governing fund
investments in derivtives.
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The SEC mends fund shrehoder reports, drmtic condensing them to highight ke
informtion for investors to ssess nd monitor their fund investments.
The SEC dopts rues to modernize nd enhnce prox voting discosure b registered
investment compnies.
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The SEC continues its unprecedented pce of new ruemkings in  b dopting vrious
chnges to existing rues, incuding:
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Chnges to shorten the settement cce for securities trnsctions from two business
ds (T+) to one (T+).
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Chnges to the rues tht govern mone mrket funds, buiding upon the chnges to
mone mrket fund regution dopted b the SEC in  nd .
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Chnges to modernize nd enhnce the Fund Nmes rue.
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