While the share of Millennial households that own mutual funds is smaller than that of older generations, they started investing at a younger age than previous generations, according to a new report.
Nearly one-third of Millennial households owned mutual funds in mid-2015, while about half of Baby Boom and Gen X households do, according to an annual survey of U.S. households by the Investment Company Institute (ICI).
ICI’s annual survey found that the median age at which adult Millennials (born between 1981 and 1997) first purchased mutual funds was 23, while the median age for first mutual fund purchase for households headed by a member of Gen X (born between 1965 and 1980) was 26. Baby Boomers (born between 1946 and 1964) were in their thirties when they made their first mutual fund purchase, according to the report.
Employer Plans an Investing Gateway
Employer-sponsored retirement plans increasingly are the gateway to mutual fund ownership. Indeed, two-thirds of mutual fund-owning households which purchased their first mutual fund in 2010 or later purchased that fund through an employer-sponsored retirement plan, compared with 57% of those that made their first purchase before 1990.
Ninety-one percent of mutual fund-owning households cited saving for retirement as a financial goal, with almost three-quarters indicating that it was the household’s primary financial goal.
ICI reports that households headed by members of the Baby Boom Generation made up the largest share — 40% — of all mutual fund-owning households in mid-2015. The next-largest shareholder group is Gen X households (32% of mutual fund-owning households), followed by adult Millennial households, which make up 16%. The two generations preceding the Baby Boomers — dubbed the “Silent” and “GI Generation” households — constitute the remaining 12%.
Baby Boomer households also hold the largest share of households’ mutual fund assets, with 53% of the total. Gen X households hold 27% of household mutual fund assets, while the Silent and GI Generations combined hold 15%. Millennials, because they are younger and have had less time to accumulate savings, hold 5% of all household mutual fund assets.
