The Investment Company Institute released its annual factbook (summarizing data trends for 2013) in May.  The full report is available for download here, and chapter overviews are available here.  

Like many others, I discovered the ICI factbook when I first started researching mutual funds.  I have cited to the annual reports extensively in three subsequent papers.  Finding this source was, and continues to feel like a stroke of really good luck because it can provide numbers to back an assertion and is a excellent source for describing current market trends.  The graphs are also excellent visual aids for presentations and class (with attribution, of course).

I plan to highlight a few sections of the report over the next several weeks.  This week's installment will focus on trends of mutual fund investment.  The academic debate about indirect ownership long ago peaked, but the trend hasn't.  To my mind, understanding the ways in which how people invest in the market (through funds) changes or exerts pressure on our corporate governance model and the role that funds play in our securities market are two of the biggest challenges of corporate law.  More on this topic later.  For now, feast on the data compiled, computed and charted for you by ICI:

These numbers drove the U.S. Mutual Fund market–the largest in the world– with over $15T in assets under management.

How are those assets allocated?  

The majority of U.S. mutual fund assets were in long-term funds. Equity funds made up 52 percent of U.S. mutual fund assets at year-end 2013 (Figure 2.1). Domestic equity funds (those that invest primarily in shares of U.S. corporations) held 38 percent of total industry assets. World equity funds (those that invest primarily in non-U.S. corporations) accounted for another 14 percent. Bond funds accounted for 22 percent of U.S. mutual fund assets. Money market funds (18 percent) and hybrid funds (8 percent) held the remainder.

How does the mutual fund market reflect consumer/investor confidence?

Lower stock market volatility also may have had a positive impact on investors’ willingness to take above-average or substantial investment risk in 2013…..In 2008, 23 percent of households were willing to take above-average or substantial investment risk. From 2009 through 2012, this level dropped to 19 percent. …In 2013, households’ willingness to take above-average or substantial investment risk increased to 21 percent, while risk aversion (as measured by the percentage of households willing to take only below-average or no risk) declined to 43 percent.

For more information on mutual fund trends, read the second chapter of the report, available here.

-Anne Tucker