How Big Is the Mutual Fund Industry?
In some ways, mutual funds take the complexity out of investing. Instead of having to select individual stocks, bonds, commodities and other products to build your portfolio, you can rely on a mutual fund that holds a basket of separate investments, usually geared towards meeting certain objectives. When you investigate the mutual fund industry, however, you quickly discover that because of its size and specialization, things can get confusing.
Other People Are Reading
-
Size
-
Worldwide, investors keep about $23.70 trillion worth of assets in mutual funds, as of September 2010. According to the Investment Company Institute, this represents an increase from the $18.16 trillion low of the first quarter of 2009. ICI and others refer to the money that goes into mutual funds as "inflow," while calling the money that comes out "outflows." When inflow exceed outflows during a given time period -- whether weekly, monthly, quarterly or yearly -- the mutual fund industry outlooks tends toward optimistic.
Types
-
While literally hundreds of mutual fund subtypes exists, you can break the industry down into four major categories -- equity, bond, money market and balanced/mixed funds. Equity funds hold stocks; bond funds hold bonds; balanced or mixed funds hold a combination of stocks, bonds and other investments; and money market funds hold more conservative investments such as certificates of deposit and treasury bills. As of September 2010, ICI reports that equity funds lead the way with $9.370 trillion worth of assets globally, followed by bond funds at $5.268 trillion, money funds at $4.586 trillion and balanced funds at $2.556 trillion.
-
Uses
-
The mutual fund industry dominates the Individual Retirement market. As of September 2010, ICI notes that nearly half of IRA investors keep their retirement nest egg parked in mutual funds. Mutual funds account for more than $2 trillion worth of IRA assets. By comparison, securities, such as common stocks, held in brokerage accounts make about 36 percent of IRA assets.
Considerations
-
You have several options if you wish to put some of your money in the hands of a mutual fund company. Often, you can go directly to the mutual fund firm who offers the fund you have interest in. Generally, this represents a commission-free way of investing in a mutual fund. Alternatively, you can purchase shares of most mutual funds in a brokerage account. While some brokerages offer a limited number of transaction fee-free funds, you might have to pay a commission charge to buy or sell a mutual fund when going this route.
-
