Mutual fund purchases outnumbered redemptions last year by a margin of two to one among fund investors who made transactions, according to a recent report release by the Investment Company Institute. The statistics are part of the Institute’s 2004 Profile of Mutual Fund Shareholders, a survey covering three years that aims to study mutual fund owners’ goals, objectives, risk profiles and views on investing.

The study also found that the average American mutual fund shareholder is middle-aged and also in the middle-income bracket and uses mutual funds as a buy-and-hold tool to help them reach retirement goals. The median age of mutual fund owners is 48, and the median income was just shy of $69,000. Nearly three-quarters, or 71%, are married and 56% have at least a college degree. Only 21% are retired from their primary occupation, however.

During the last three years and despite the bear market, mutual fund shareholders continued to stay the course, maintaining a buy-and-hold attitude. Last year, 60% of mutual fund investors made no transactions in the mutual funds they held, with the exception of automatic contributions.

Additionally, 82% of fund owners said they are not concerned with short-term market fluctuations and slightly more, 84%, indicated that they are willing to take on at least average investment risk or greater to achieve comparable gain.

Furthermore, the ICI study concluded that younger generations are starting to take saving for retirement more seriously. "Half of the nation’s fund owners are ‘Baby Boomer,’ but in the past three years, ‘Generation Xers’ have now increased to represent approximately 25% of mutual fund owners," said Sandy West, the ICI’s director of market policy research. "This is a positive trend in that it shows younger households are more inclined to saving for the future."

 

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