Retirement Plans a Big Source of Mutual Fund Investing for Millennials

Of all demographic groups, Millennial households are the most likely to own mutual funds only through their employer-sponsored retirement plans, according to the Investment Company Institute (ICI).

This year, 47% of Millennial households own mutual funds through their 401(k) or other type of workplace retirement plan. By comparison, only 33% of Baby Boomer households own these funds only through their workplace retirement plan.

Additionally, individuals across all income levels and generations own mutual funds, according to the ICI. Sixteen percent of mutual fund-owning households had household incomes lower than $49,999. Sixteen percent had household incomes between $50,000 and $74,999, 17% had household incomes between $75,000 and $99,999, and 51% had household incomes of $100,000 or more.

“Our 2018 household survey shows that savers across all income levels continue to invest in mutual funds,” says Sarah Holden, senior director of retirement and investor research at the ICI. “These data help underscore the critical role mutual funds play in helping millions of U.S. households save and prepare for retirement and other important financial goals.”

ICI also learned that mutual fund ownership is most prevalent among Generation Xers and Baby Boomers. This year, 52% percent of the 35.0 million households headed by a Gen Xer own mutual funds and 42% of the 42.5 million households headed by a Millennial own mutual funds. By comparison, only 34% of the households headed by a Baby Boomer own mutual funds.

Additionally, 44.8% of all U.S. households own shares of mutual funds, exchange-traded funds (ETFs), closed-end funds or unit investment trusts. Mutual funds were the most common type of investment owned, with 43.9% of U.S. households owning them. All told, 99.5 million Americans own mutual funds.

Among households owning mutual funds, 82% own more than one fund, and 88% own equity funds.

ICI’s findings are based on a telephone survey, both landline and cellphone, of 5,001 households conducted from May through July.