Mutual Funds Hold 21 Percent Share of U.S. Retirement Market Assets

Mutual funds retained a 21 percent share of the $10.9 trillion U.S. retirement market in 2001 with $2.3 trillion in assets held in retirement accounts, according to new research released today by the Investment Company Institute, the national association of

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Mutual funds retained a 21 percent share of the $10.9 trillion U.S. retirement market in 2001 with $2.3 trillion in assets held in retirement accounts, according to new research released today by the Investment Company Institute, the national association of the mutual fund industry.

Institute research also found that assets in the overall U.S. retirement market declined 4 percent in 2001, and retirement assets invested in mutual funds were down similarly. The decline in retirement mutual fund assets occurred entirely in the equity fund category due to widespread weakness in stock prices in 2001. Mutual fund assets in both Individual Retirement Accounts (IRAs) and defined contribution plans declined in 2001. The share of mutual fund assets held through retirement accounts edged slightly lower to 33 percent from 35 percent in 2000.

Retirement investors continued to keep a long-term investment horizon despite adverse market conditions. Net new cash flow into mutual funds from retirement accounts strengthened in 2001. For the year, net flows to mutual funds from retirement accounts was an estimated $140 billion, up 18 percent from the year before. Last year’s net flow was the third largest on record, and the increase in flows occurred in both IRAs and defined contribution plans. Institute research found that retirement account net flows were positive for all types of mutual funds. Overall, retirement account net flows amounted to about one-quarter of total mutual fund industry net new cash flows in 2001.

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