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Nearly Half of U.S. Households Owns Equities,
Joint ICI/SIFMA Survey Finds Ownership Driven by Growth
of DC Savings Plans
Washington, DC, December 15,2008-Nearly half of U.S. households owns equities
or bonds, a significant increase during the last two decades. But
ownership of these investment assets has declined since 2001, as
increasing market volatility has reduced Americans' tolerance for
risk, according to a new joint
study released today by the Investment Company Institute and
the Securities Industry and Financial Markets Association.
Based on a survey of more than 5,000
households, researchers at ICI and SIFMA calculate that 54.5
million households participated in the market through equity or
bond ownership in early 2008. This represents 47 percent of U.S.
households-up from 39 percent in 1989, the first year for which
directly comparable survey data are available.
The two-decade rise in equity and bond
investment was fueled by the rapid growth of defined contribution
(DC) retirement savings plans, such as 401(k) plans, the
researchers conclude. Between 1989 and 2004-the latest year for
which comparable data are available-the number of participants in
private-sector DC plans nearly doubled, from 36 million to 65
million. The ICI/SIFMA survey shows that at every income level,
working-age households are much more likely to be equity or bond
owners if their employer sponsors a DC plan.
"This research underscores the significant role of the 401(k)
system in turning Americans into savers and investors. It also
points to the important role that employers play in offering
opportunities for ownership and building retirement security," said
Paul Schott Stevens, president and CEO of ICI. "Despite the
market's recent turmoil, Americans' retirement assets are greater
than in decades past. Today's market conditions underscore the need
to provide more and better investment education to help Americans
manage their assets for a secure future."
"Market volatility is daunting to investors, as this study makes
clear, but over the long-term, savings and investment in the
financial marketplace remain a crucial stepping stone on the path
towards a secure retirement," said Tim Ryan, president and CEO of
SIFMA. "As Americans work to strengthen and build their family's
nest egg, this report provides important benchmarks for both the
industry and policymakers on their efforts."
Other key findings of the new study, Equity
and Bond Ownership in America, 2008, include:
· Among the working-age population, household
income plays the dominant role in determining ownership patterns.
Within income groups, education is also a determinant. For example,
among those earning $100,000 or more, the ownership rate is 65
percent for those with no more than a high school education, and 90
percent for those with at least some graduate school education.
· Each successive generation of workers has
generally higher equity ownership rates at any given age than have
· Risk tolerance has decreased among both
younger and older households since 2001. This decrease in
willingness to take risks appears to be related to the stock-market
turbulence in the bear market of 2000-2002 and appears to have
played a role in the decrease in ownership rates in recent years,
from a peak of 57 percent of households in 2001 to 47 percent in
· Investment goals and risk tolerance among
equity and bond owners vary systemically with age, with older
investors much less likely to say they are willing to take
above-average or substantial risks in order to get higher
· Most equity and bond investors use the
Internet for managing or viewing their accounts and regularly rely
on advisers for investment advice and guidance. Two-thirds (67
percent) of owners consulted with financial advisers during the
2003-2008 time period.
and Bond Ownership in America, 2008, is the fourth joint
ICI/SIFMA survey of asset ownership. Prior studies, conducted in
1999, 2002, and 2005, focused on equity ownership, both through
mutual funds and through direct investment in stocks. This year's
survey for the first time includes detailed questions about bond
ownership, including direct investment in bonds, ownership of bond
mutual funds, and holdings of "hybrid" funds that invest in both
equities and bonds.
The study traced the pattern of ownership rates
since 1989 using the Federal Reserve Board Survey of Consumer
Finances and the ICI Annual Mutual Fund Shareholder Tracking
Survey, together with the 2008 ICI/SIFMA Equity and Bond Owners
Survey. ICI senior economist John Sabelhaus and ICI associate
economists Michael Bogdan and Daniel Schrass authored the
The Securities Industry and Financial
Markets Association brings together the shared interests of more
than 650 securities firms, banks and asset managers. ICI is the
national association of U.S. investment companies, including mutual
funds, closed-end funds, exchange-traded funds (ETFs), and unit
investment trusts (UITs).