ICI reported in the 2008 Investment Company Fact Book that strong growth in Individual Retirement Accounts (IRAs) and employer-sponsored defined contribution plans powered the 7% increase. At year-end 2007, investors held $9.2 trillion in IRAs and DC plans – about half of the entire retirement market, ICI said in a press release.
IRA assets rose 12% to $4.7 trillion in 2007. Of those assets, $2.2 trillion was invested in mutual funds. Assets held in DC plans rose 8% to $4.5 trillion, with $2.4 trillion invested in mutual funds. The most popular type of DC plans were 401(k)s, with $3 trillion in assets.
Other information from the Fact Book included:
- Mutual funds managed $4.6 trillion or 26% of retirement market assets. The remaining $13 trillion of assets were managed by pension funds, insurance companies, and brokerage firms.
- The $4.6 trillion of retirement assets invested in mutual funds represented 38% of the $12 trillion that funds managed at year-end 2007.
- More than 90% of mutual-fund owning households reported that they are saving for retirement.
- Three-fifths of mutual-fund owning households invest in funds through an employer-based retirement plan such as a 401(k), and 57% of the households that own mutual funds purchased their first fund through an employer-sponsored retirement plan.
- Net new cash flow into lifestyle and lifecycle funds reached a record $92 billion in 2007.
- Assets in lifecycle funds rose 61% to $183 billion, and 88% of these assets were held in retirement accounts. Assets in lifestyle funds reached $238 billion, of which 45% were held in retirement accounts.
- 401(k) assets invested in mutual funds are concentrated in lower-cost funds. More than three-quarters of the 401(k) assets invested in stock funds are invested in funds with expense ratios of less than 1%.
ICI publications can be accessed here .
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