2017 INVESTMENT COMPANY FACT BOOK 2017 COMPANY INVESTMENT FACT BOOK a Review of Trends and Activities in the Investment Company Industry
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2017 INVESTMENT COMPANY FACT BOOK 2017 INVESTMENT COMPANY FACT BOOK FACT INVESTMENT COMPANY 2017 A Review of Trends and Activities in the Investment Company Industry 57th edition www.icifactbook.org 21401 H STREET, NW | WASHINGTON,0 DC 20005 | 202-326-5800 | WWW.ICI.ORG 17 2016 Facts at a Glance Total worldwide assets invested in regulated open-end funds* $40.4 trillion Americas $21.1 trillion Europe $14.1 trillion Africa and Asia-Pacific $5.2 trillion US-registered investment company total net assets $19.2 trillion Mutual funds $16.3 trillion Exchange-traded funds $2.5 trillion Closed-end funds $262 billion Unit investment trusts $85 billion US-registered investment companies’ share of: US corporate equity 31% US and foreign corporate bonds 19% US Treasury and government agency securities 13% US municipal securities 23% Commercial paper 19% US household ownership of US-registered funds Number of households owning funds 55.9 million Number of individuals owning funds 95.8 million Percentage of households owning funds 44.4% Median mutual fund assets of mutual fund–owning households $125,000 Median number of mutual funds owned 4 US retirement market Total retirement market assets $25.3 trillion Percentage of households with tax-advantaged retirement savings 61% IRA and DC plan assets invested in mutual funds $7.6 trillion * Regulated open-end funds include mutual funds, exchange-traded funds (ETFs), and institutional funds. 17 2017 INVESTMENT COMPANY FACT BOOK 2017 INVESTMENT COMPANY FACT BOOK A Review of Trends and Activities in the Investment Company Industry 57th edition www.icifactbook.org The Investment Company Institute (ICI) is a leading global association of regulated funds, including mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs) in the United States and similar funds offered to investors in jurisdictions worldwide. ICI seeks to encourage adherence to high ethical standards, promote public understanding, and otherwise advance the interests of funds, their shareholders, directors, and advisers. Although information or data provided by independent sources is believed to be reliable, ICI is not responsible for its accuracy, completeness, or timeliness. Opinions expressed by independent sources are not necessarily those of the Institute. If you have questions or comments about this material, please contact the source directly. Fifty-seventh edition ISBN 1-878731-62-9 Copyright © 2017 by the Investment Company Institute. All rights reserved. CONTENTS Letter from the Chief Economist . viii ICI Research Staff and Publications . x. PART 1: ANALYSIS AND STATISTICS List of Figures . 2 Chapter 1: US-Registered Investment Companies . 6. Chapter 2: Recent Mutual Fund Trends . 26. Chapter 3: Exchange-Traded Funds . 54. Chapter 4: Closed-End Funds . 74 Chapter 5: Fund Expenses and Fees . 86. Chapter 6: Characteristics of Mutual Fund Owners . 110 . Chapter 7: Retirement and Education Savings . .130 . PART 2: DATA TABLES List of Data Tables . 168. Section 1: Mutual Fund Totals . 170 Section 2: Closed-End Funds, Exchange-Traded Funds, and Unit Investment Trusts . 178 Section 3: Long-Term Mutual Funds . .184 . Section 4: Money Market Funds . 204. Section 5: Additional Categories of Mutual Funds . 211 . Section 6: Institutional Investors in the Mutual Fund Industry . .229 . Section 7: Retirement Account Investing in Mutual Funds . 232. Section 8: Worldwide Regulated Open-End Fund Totals . 234 Appendix A: How US-Registered Investment Companies Operate and the Core Principles Underlying Their Regulation . 240 Appendix B: Significant Events in Fund History . 264 Glossary . 267. Index . 283 Letter from the Chief Economist LETTER FROM THE CHIEF ECONOMIST Have you ever tried to put a jigsaw puzzle together without knowing what the finished work should look like? It’s difficult—even with help from family and friends. Are those blue pieces part of a peaceful lake or a cloudless sky? Are those dark pieces a forest floor or storm clouds brewing on the horizon? Without the completed picture on the puzzle box as a guide, everyone has their own idea of what the completed work will look like and how to put it together. The development of public policy is often compared to making sausage. But to me, it’s more like assembling a jigsaw puzzle without the benefit of the box. Legislators and regulators typically are tasked with coordinating a policy action, but they often have very limited information available to them. They do not know how the pieces will fit together, and they all have their own ideas of what the policy should look like. But unlike a jigsaw puzzle, a flawed law or regulation can’t easily be disassembled and put back in the box. Economists and researchers are frequently called upon to bring greater clarity to this uncertain process. But the picture they see—complete with unintended consequences and unexpected costs—doesn’t always match the vision that policy advocates are pursuing. Sometimes that leaves researchers in a position of having to explain that their analysis does not support a particular policy action, or that changes need to be made to reduce the chances of negative effects. The process can be frustrating for the policy’s proponents. This is particularly the case when the potential benefits of a rule are more tangible or measurable than its costs. Despite this, economists have a responsibility to help policymakers know not only what the final policy should look like, but also the effect it will have. Over the past 12 years, in my introduction to this book, I have addressed the role of ICI Research. Our mission is to help “facilitate sound, well-informed public policies affecting investment companies, their investors, and retirement markets.” It directs us to undertake research to guide fact-based, defensible policy proposals, rather than using data and analysis to defend a predetermined position. viii 2017 INVESTMENT COMPANY FACT BOOK What is the difference? Guiding policy with research means that data and analysis are used at the outset to help determine what a policy position should be. We best serve the interests of funds and their investors when we direct our resources to understanding the potential benefits, as well as the risks, of policies under consideration. The alternative—using research to defend a predetermined policy position—amounts to no more than forcing together mismatched pieces of a puzzle. Doing so can create a distorted picture of that policy, exposing our members and their shareholders to unintended consequences. In the past few years, ICI researchers have raised public concerns about the economic analysis behind various government proposals in the retirement and financial markets. Challenging a proposed rule that has significant political muscle behind it requires considerable fortitude and perseverance. My colleagues and I serve our members by bringing comprehensive, informed analysis to a particular issue; we have the same obligation in the public forum. The mission to bring fact-based analysis to the formulation of public policy guides our work at ICI Research. Like everyone else participating in the process, we do not know with certainty how all of the pieces of the public policy will fit together, or whether the positive impact will outweigh any negative effects. But bringing our evidence-based analysis to the discussion increases the chances that the policy will—on balance—benefit the economy and society as a whole. This same mission also drives our annual update of the Investment Company Fact Book. Dozens of staff members across ICI spend months putting together the pieces of this volume. As with anything of value, it requires hard work and dedication—but we know, based on the feedback we receive, that the collective effort is worth it. We are confident that this volume, like the 56 volumes preceding it, will positively contribute to the private and public discussions that lead to good policies and decisions for funds and their investors. LETTER FROM THE CHIEF ECONOMIST ix ICI RESEARCH STAFF AND PUBLICATIONS ICI Senior Research Staff CHIEF ECONOMIST Brian Reid leads the Institute’s Research Department. The department serves as a source for statistical data on the investment company industry and conducts public policy research on fund industry trends, shareholder demographics, the industry’s role in US and international financial markets, and the retirement market. Before joining ICI in 1996, Reid served as an economist at the Federal Reserve Board of Governors. He has a PhD in economics from the University of Michigan and a BS in economics from the University of Wisconsin–Madison. SENIOR DIRECTOR OF INDUSTRY AND FINANCIAL ANALYSIS Sean Collins heads ICI’s research on the structure of the mutual fund industry, industry trends, and the broader financial markets. Collins, who joined ICI in 2000, is responsible for research on the flows, assets, and fees of mutual funds, as well as a research initiative to better understand the costs and benefits of laws and regulations governing mutual funds. Before joining ICI, Collins was an economist at the Federal Reserve Board of Governors and at the Reserve Bank of New Zealand. He has a PhD in economics from the University of California, Santa Barbara, and a BA in economics from Claremont McKenna College. SENIOR DIRECTOR OF RETIREMENT AND INVESTOR RESEARCH Sarah Holden leads the Institute’s research efforts on investor demographics and behavior and retirement and tax policy. Holden, who joined ICI in 1999, heads efforts to track trends in household retirement saving activity and ownership of funds as well as other investments inside and outside retirement accounts. Before joining ICI, Holden served as an economist at the Federal Reserve Board of Governors. She has a PhD in economics from the University of Michigan and a BA in mathematics and economics from Smith College. SENIOR DIRECTOR OF STATISTICAL RESEARCH Judy Steenstra oversees the collection and publication of weekly, monthly, quarterly, and annual data on open-end mutual funds, as well as data on closed- end funds, exchange-traded funds, unit investment trusts, and the worldwide fund industry.