SECURITIES 
MUTUAL FUNDS

A mutual fund is a pool of assets that is managed by professional investment managers. Embraced as an investment vehicle by those who do not want to actively manage their investment accounts but who believe they can earn higher returns in the securities markets than through traditional savings bank products, mutual funds have experienced tremendous growth. In 1940 there were only 68 funds and about 300,000 shareholder accounts. By 1990 there were 3,000 funds and 62 million accounts with a trillion dollars in assets. In 2007, 8,000 funds had nearly 300 million shareholder accounts and over $12 trillion in assets. According to the Investment Company Institute, the trade association for the mutual fund industry, 44 percent of all American households owned mutual funds in 2007, up from 33 percent in 1996.

Mutual funds are regulated by the Investment Company Act of 1940, which defines, among other things, the responsibilities of mutual fund companies to the public and requirements regarding financial reporting, governance and fiduciary duties. Mutual fund managers have a substantial presence in the securities markets as they trade and manage the securities within the funds they oversee. For further information on mutual funds, see Chapter 3, Retirement Funds.
MUTUAL FUND INDUSTRY NET ASSETS, NUMBER OF FUNDS AND SHAREHOLDER ACCOUNTS, 1940-2007

(End of year)


Year
Total net assets
($ billions)
Number of funds
Number of
shareholder accounts (1)
(000)
1940$0.45 68296
196017.031614,898
197047.6236110,690
1985495.391,52834,098
19901,065.193,07961,948
19952,811.295,725131,219
20006,964.638,155244,705
20037,414.408,126260,698
20048,106.948,041269,468
20058,904.827,975275,479
200610,412.468,118288,596
200712,021.038,029298,966
(1) Number of shareholder accounts includes a mix of individual and omnibus accounts.

Source: Investment Company Institute.
  • In 2007 mutual funds accounted for 21 percent of the U.S. private and public pensions sector, or $1.9 trillion, according to the Board of Governors of the Federal Reserve System. This amount represented about 16 percent of all mutual fund assets.

  • Mutual funds own 26 percent of all U.S. corporate equity, according to the Federal Reserve.

MUTUAL FUND INDUSTRY NET ASSETS BY TYPE OF FUND, 1985-2007

( $ billions, end of year)




Year
Equity funds
Hybrid funds
Bond funds
Taxable money market funds
Tax-exempt money market funds
Total
1985$111.3$17.6$122.7$207.5$36.3$495.4
1990239.536.1291.3414.783.61,065.2
19951,249.1210.3598.9630.0123.02,811.3
20003,961.9346.3811.21,607.2238.06,964.6
20033,684.2430.51,247.81,763.6288.47,414.4
20044,384.1519.31,290.41,602.9310.48,106.9
20054,939.8567.31,357.21,706.5334.08,904.8
20065,910.5653.21,494.41,988.0366.410,412.5
20076,521.4713.41,679.02,642.1465.112,021.0
Source: Investment Company Institute.
NUMBER OF MUTUAL FUNDS BY TYPE, 1985-2007

(End of year)


Year
Equity funds
Hybrid funds
Bond funds
Taxable money market funds
Tax-exempt money market funds
Total
19855621034033481121,528
19901,0991931,0465062353,079
19952,1394122,1776743235,725
20004,3855232,2087033368,155
20034,5995082,0456623128,126
20044,5475102,0416393048,041
20054,5865052,0135952767,975
20064,7695081,9935752738,118
20074,7674881,9675482598,029
Source: Investment Company Institute.


Source: Investment Company Institute.

TOP TEN MUTUAL FUND COMPANIES BY ASSETS, 2008 (1)

($000)


Rank
Company
Total net asssets
1Fidelity Investments                $1,309,753,543
2Capital Research & Management       1,212,859,849
3Vanguard Group                      1,201,542,617
4PNC Financial Services Group          382,452,460
5Franklin Templeton Investments        337,256,262
6JPMorgan Chase & Co.               326,702,566
7Columbia Management Group            287,698,656
8Federated Investors                   277,993,573
9Bank of New York/Dreyfus Corporation   276,688,811
10Schwab Funds                          243,741,705
(1) As of March 31, 2008. Includes members of Investment Company Institute only.

Source: Investment Company Institute.