Investment funds are a type of investment that pools the money from investors and then invests it to earn income for them. Investment funds can be either open-ended or closed-ended, meaning they have no set end date, or they do.
This article will go over some interesting facts about investment funds and how you can start investing in them today.
Investment Funds Statistics
Statistics #1: Mutual Funds Typically Maintain a Cash Ratio of 3% To 5%
This means that they’ll have the percentage of their assets in cash or marketable securities. Investments like stocks, bonds, and treasury bills1 with maturities of less than one year.
Statistics #2: Luxembourg Is the Second-Largest Mutual Fund Industry
According to the Investment Company Institute2, Luxembourg has a population of about 500,000 people and is the second-largest mutual fund industry in Europe.
Statistics #3: Fidelity Investments Has the Highest Mutual Funds With an Average Expense Ratio of 0.42%
Fidelity Investments is a mutual fund company that offers investments to its clients. The average expense ratio of Fidelity Investments’ funds ranges from 0.04% to 0.61%, which is lower than the industry average of 0.86%.
Statistics #4: Active and Passive Fund Expense Ratios Are Expected to Decline by 22% By 2025
Based on a study by PwC3, the average expense ratio of an actively managed fund is expected to decline from 0.85% in 2015 to just 0.39%, while the expense ratio for a passively managed fund is expected to decline from 0.38% in 2015 to just 0.24%.
Statistics #5: 22% Of Investors Say the Primary Reason They Avoid Mutual Funds Is High Management Fees
A study conducted by Bankrate found that 22% of investors avoid mutual funds because they have high management fees, while 19% of investors are awaiting a market correction before investing in them.
Statistics #6: Saving for Retirement Is the Primary Financial Goal for 73% Of Mutual Fund Owners
A study conducted by Fidelity Investments found that 73% of mutual fund owners are saving for retirement, while only 20% are saving for their children’s education.
Statistics #7: 45% Of All Mutual Fund Assets Are Held in Retirement Accounts
According to the Investment Company Institute, 45% of all mutual fund assets are held in retirement accounts, while only 37% of all mutual fund assets are held in taxable accounts.
Statistics #8: The Average Return on Mutual Funds in Seven Major Categories Was About 13%
The average return on mutual funds in seven significant categories was about 13% for the ten years ending December 31, 2017, while the S&P 500 index rose by about 121%.
7 Fun Facts About Investment Funds
Fact #1: Hybrid Mutual Funds Have the Highest Asset-Weighted Average Expense Ratios at 0.78%
Hybrid funds are mutual funds that integrate a mixture of active management and indexing strategies, and they tend to have the highest average expense ratios at around 0.78%.
Fact #2: Mutual Fund Fees Can Reduce Your Returns by 0.5% To 8.5%
Mutual funds can cost anywhere from 0.25% to around 20%. This may not seem like a lot on the surface, but these fees can reduce your returns by between 0.50% and as much as an astounding 18%.
Fact #3: Two-Thirds of All Actively-Managed Funds Do Worse Than Their Benchmark Indexes
A study by the Center for Research in Security Prices4 found that two-thirds of actively managed funds do worse than their benchmark indexes, which means they do not outperform their index by more than the difference in cost between a mutual fund and an ETF5.
Fact #4: For Stock Mutual Funds, A Good Long-Term Return Is 8%–10%
A study by Morningstar found that a good long-term return for stock mutual funds is around 8% to 10%, which is higher than the return of 5% to 7% for bonds.
Fact #5: 99% Of Funds That Have Outperformed the Market in One Decade Fall to the Average the Following Decade
A study by the Vanguard Group found that 99% of funds that have outperformed the market in one decade tend to fall to the average return or below during a subsequent decade, which indicates that past performance is no guarantee for future success.
Fact #6: The Largest Mutual Fund in the World Is the VTSAX
The Vanguard Total Stock Market Index Fund Admiral Shares (Vtsax) is the largest mutual fund in the world by AUM with about £330 billion, which is about three times larger than the second-largest fund.
Fact #7: Blackrock Funds Is the Largest Mutual Fund Management Company in the World
Blackrock Funds is the largest mutual fund management company globally, with over £25 trillion of assets under management, which is about one-third of the total assets under management for all mutual funds.
What Is an Investment Fund?
An investment fund pools funds from many investors to buy securities in a single, professionally managed portfolio. The group of investors who invest together is called the “shareholders” or “unitholders.”
Who Invests in Investment Funds?
In general, individuals and businesses invest their savings into a fund. Individuals might do this to spread the risk of investing or because they don’t have enough money for an individual stock purchase.
Businesses generally use a fund as part of their retirement plan for employees.
What Are the Different Types of Investment Funds?
Mutual funds, Exchange Traded Funds (ETFs), and hedge funds are just some of the different investment funds.
What Is the Difference Between Stocks and Bonds?
Stocks are shares of ownership in a company, while Bonds have a regular rate of interest.
It’s not uncommon for people to think of investing as a risky endeavor.
While it does carry some degree of risk when done right and with the right information in hand, investments can be an excellent tool for long-term savings and growth that will help you reach your financial goals.
Statistics show that investors who have invested in stocks over time fare significantly better than those who put their money into cash or fixed-income products like bonds or CDs.