The recent bear market did little to quench the
American public's desire for equity investments, according to a new
study.
It found that the number of households owning
equities has increased by 7.1 million since 1999-to a figure that now
comprises about half the households in the nation.
About 57 million households own stock either
directly or through mutual funds, according to the joint study by the
Securities Industry Association (SIA) and the Investment Company
Institute (ICI).
Ninety percent of equity-owning households own
mutual funds, while about half own individual stocks, according to the
study.
Equity ownership has grown through bull and bear
markets, including the bear market of 2000-2002-a trend largely fueled
by the growth of 401(k)s and other defined contribution retirement
plans.
Between 1999 and 2005, the number of households
owning equities through employer-sponsored retirement plans grew by 5.2
million. During the same period, the number of households owning
equities outside these plans grew by 2.4 million.
The study also found that nearly half of all
equity-owning households were introduced to equity ownership through
employer-sponsored retirement plans.
This has given rise to differences in ownership
habits among different age groups, according to the study. Older
investors who did not have access to defined contribution plans in
their early working years, for example, largely made their first equity
purchase outside a retirement plan. Younger investors, meanwhile, are
most likely to have started equity investing inside a retirement plan.
"As a result, there are clear generational
differences among America's individual investors with regard to the
types of equities held and the tax status of these investments,"
according to the study's authors.
Americans, however, are also dabbling in the stock
market beyond just their retirement plans. The study found that 75% of
households own stocks or mutual funds outside their retirement plans.