Mutual fund investors focus on fees, past performance and risk when they consider whether or not to invest in a certain fund, according to a survey released yesterday by the ICI.
This survey, entitled Understanding Investor Preferences For Mutual Fund Information, is based on interviews earlier this year with more than 700 investors who had purchased stock, bond, or hybrid funds outside employer retirement plans over the last five years.
The survey, which was released at the 48th ICI General Membership Meeting in Washington, found that investors make little use of prospectuses or shareholder reports.
The factor they find most important is fees (74%), followed by performance (69%), risk (61%) performance relative to an index (55%) and sales charges (52%).
The survey concluded that about two thirds of investors did not use fund prospectuses or shareholder reports when choosing a fund. Nearly three quarters of investors rely on professional financial advisers in purchasing funds, the ICI found.
"The survey makes clear what we have suspected for some time: fund investors are swamped with disclosure and other information that they largely ignore. Most desire simple, concise information on paramount issues such as fees and historical performance," said Sandy West, director of market policy research. "The vast majority seeks professional financial advice in making investment decisions. And, a growing number are embracing technology to seek information and conduct transactions."
Investors are also increasingly using the Internet, with half going online at least once a day. These investors also say that their use of the Internet has gone up over the past year or so, and nearly 90% of those polled said obtaining information online is the wave of the future.