Who Are The Mutual Fund Regulars?

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According to the National Association of Investment Companies, at the end of 1960 there were approximately 2.9 million shareholders in investment companies. Ten years earlier, it is estimated that there were probably not one fourth as many. At the end of 1961, shareholder accounts exceeded 5.3 million, and the number of accumulation plans at the close of 1961 is estimated at 1.7 million, an increase of almost 300,000 during the year.

Among other facts shown in the study are these: 25 percent of the stockholders were professional people and only 7.8 percent were salesmen; families with incomes of $15,000 and more annually held 15 percent of the value of open-end holdings, whereas families with incomes up to $5,000 held 19.6 percent; when holders were classified by age, persons 60 years old or older constituted 37.3 percent of all owners of such securities; cash holdings (29.5 percent) and salaries were the two main sources from which the most recent open-end-share investment was made. Apparently, the public has reached the same conclusion that I have; there is no inconsistency in holding both the stocks of individual companies and investment company shares.

The major objective cited for the purchase of open-end-company shares was future retirement income. Approximately 25 percent were looking for a better return on savings.

A significant part of the study covers the investment company features which investors preferred. Half of the investors who replied to the questionnaire cited diversification as the primary advantage of owning investment company shares. Other reasons also were cited:

Both the average initial purchase and average holding of open-end shares have tended to rise over the years. A number of funds now point to the sizable holdings of their shares by college endowment funds, pension funds, charitable institutions, trade unions, and other large investors. It is difficult, however, to ascribe significance to the geographic distribution of holders and new investors.

Widespread ownership of investment company shares presents the same problem of stockholder-management relations that confront investors in other securities. Full and frequent publicity, at any rate, has been cemented into the policies of investment companies. On the whole, they have done a commendable job in this respect.

An investment company official has said: "We deal with the public's money, and therefore we live in a glass house."

Owners of investment company shares are not exempt from the lethargy, which characterizes American stockholders in general. If only a few instances of reprehensible conduct or questionable practices have crept into the operation of investment companies, it is not due to any demonstrable watchfulness by investors.

Most investors are pleased to note substantial holdings of an investment company's shares by officers and directors and persons associated with the underwriters. Stockholder management is an asset. In dealing with money, readiness to risk one's own resources is a test not to be dismissed lightly. A number of funds now have stock option plans for members of their staffs, for they have found such plans a helpful means of retaining able people.

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