Mutual Funds

A mutual fund is a pool of assets that is managed by professional investment managers. Embraced as an investment vehicle by people 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 2011, 7,637 funds had 280 million shareholder accounts and $11.6 trillion in assets, down slightly from $11.8 trillion in 2010. According to the Investment Company Institute, the trade association for the mutual fund industry, 52.3 million households, or 44.1 percent of all U.S. households, owned mutual funds in 2011, down from 45.3 percent in 2010.

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, 1940-2011

(End of year)

Year Total net assets
($ billions)
Number of funds Number of shareholder
accounts (1) (000)
1940 $0.45 68 296
1950 2.53 98 939
1960 17.03 161 4,898
1970 47.62 361 10,690
1980 134.76 564 12,088
1985 495.39 1,528 34,098
1990 1,065.19 3,079 61,948
1995 2,811.29 5,725 131,219
2000 6,964.63 8,155 244,705
2005 8,891.11 7,974 275,479
2007 12,001.46 8,026 292,555
2008 9,603.65 8,022 264,599
2009 11,120.15 7,684 269,224
2010 11,820.65 7,580 290,885
2011 11,621.60 7,637 279,715

(1) Number of shareholder accounts include a mix of individual and omnibus accounts.

Source: Investment Company Institute.

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  • Mutual funds accounted for 35.2 percent of private pension fund assets in 2011, up slightly from 34.9 percent in 2010, according to the U.S. Federal Reserve.
  • Mutual funds owned 19.7 percent of U.S. corporate equities in 2011, down from 20.5 percent in 2010, according to the U.S. Federal Reserve.

 

MUTUAL FUND INDUSTRY NET ASSETS BY TYPE OF FUND, 1985-2011

($ 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 $207.6 $36.3 $495.4
1990 239.5 36.1 291.3 414.6 83.8 1,065.2
1995 1,249.1 210.3 598.9 631.3 121.7 2,811.3
2000 3,938.8 363.8 816.8 1,611.4 233.9 6,964.6
2005 4,886.8 609.9 1,367.6 1,690.5 336.4 8,891.1
2007 6,416.8 807.1 1,691.8 2,617.7 468.1 12,001.5
2008 3,641.2 551.8 1,578.4 3,338.6 493.7 9,603.7
2009 4,879.9 695.4 2,229.0 2,917.0 398.9 11,120.2
2010 5,584.7 799.3 2,632.8 2,473.9 330.0 11,820.7
2011 5,205.1 838.7 2,886.4 2,399.7 291.7 11,621.6

Source: Investment Company Institute.

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NUMBER OF MUTUAL FUNDS BY TYPE, 1985-2011

(End of year)

Year Equity funds Hybrid funds Bond funds Taxable money
market funds
Tax-exempt
money market
funds
Total
1985 562 103 403 350 110 1,528
1990 1,099 193 1,046 505 236 3,079
1995 2,139 412 2,177 676 321 5,725
2000 4,372 519 2,225 704 335 8,155
2005 4,571 482 2,051 593 277 7,974
2007 4,742 476 2,003 545 260 8,026
2008 4,802 483 1,954 534 249 8,022
2009 4,616 471 1,893 476 228 7,684
2010 4,547 475 1,906 442 210 7,580
2011 4,581 495 1,929 431 201 7,637

Source: Investment Company Institute.

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MUTUAL FUND INDUSTRY NET ASSETS BY TYPE OF FUND, 2011

Source: Investment Company Institute.

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NUMBER OF MUTUAL FUNDS BY TYPE OF FUND, 2011

 

TOP TEN MUTUAL FUND COMPANIES BY ASSETS, 2011 (1)

($000)

Rank Company Assets under management
1 Vanguard Group $1,492,455,158
2 Fidelity Investments 1,268,328,943
3 Capital Research & Management 990,509,088
4 PIMCO Funds 474,901,111
5 J.P. Morgan Chase & Co. 417,859,849
6 Franklin Templeton Investments 377,323,887
7 BlackRock Funds 342,859,903
8 Federated Investors 301,134,286
9 T. Rowe Price 291,273,051
10 Bank of New York Mellon/Dreyfus Co. 240,610,290

(1) As of December 31, 2011. Includes members of Investment Company Institute only.

Source: Investment Company Institute.

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