Shelly Antoniewicz, Chief Economist, at the Investment Company Institute, conducts research on the structure and trends of the ETF and mutual fund industries and on financial markets in the US and globally. Shelly also contributes to analysis on financial systemic risks and conducts economic analysis on the impacts of proposed laws and regulations governing funds.
Shelly has been with ICI since 2005, serving as senior economist, senior director of industry and financial analysis, and deputy chief economist. Prior to joining ICI, Shelly spent 13 years as a staff economist and senior economist at the Federal Reserve Board. She has a PhD in Economics from the University of Wisconsin, Madison.
In this episode, we are joined by Shelly Antoniewicz, Chief Economist at the Investment Company Institute (ICI), for a data-rich exploration of the modern fund industry. Shelly walks us through the staggering scale of global regulated funds, how ETFs and mutual funds shape capital allocation, and why the rise of indexing may not be as disruptive as critics fear.
We discuss the growth of ETFs versus mutual funds, increasing concentration among large fund sponsors, and how financial advisors are reshaping portfolios around low-cost investment products. Shelly also explains why fund fees keep falling, how 401(k) plans have democratized investing for middle-class households, and why investor choice remains central to healthy capital markets. Along the way, we unpack active ETFs, intraday liquidity, interval funds, private credit exposure, and the evolving role of retail investors in financial markets.
Key Points From This Episode:
(0:00:19) Introducing Shelly Antoniewicz and the role of the Investment Company Institute.
(0:01:14) The Investment Company Fact Book and why it has become a foundational resource for fund industry data.
(0:03:31) Regulated funds globally now account for roughly $88 trillion in assets.
(0:04:47) The U.S. market contains nearly 17,000 investment companies across mutual funds, ETFs, and related structures.
(0:05:40) U.S. equity funds alone hold roughly $27 trillion in assets.
(0:06:52) More than half of mutual fund and ETF assets are now in index strategies.
(0:07:40) Why index funds still represent only a minority share of the overall U.S. stock market.
(0:09:48) What academic research says about indexing’s impact on price discovery and market efficiency.
(0:13:10) There are nearly 770 fund sponsors in the U.S., though industry concentration continues to rise.
(0:13:42) ETF sponsors experienced enormous inflows in 2025, with 90% receiving net new cash.
(0:15:23) Why the largest fund complexes now control a much larger share of industry assets.
(0:16:06) Compliance costs and regulation as drivers of industry consolidation.
(0:17:31) Falling expense ratios as evidence that the industry remains highly competitive.
(0:19:28) How investor flows often reflect rebalancing behavior rather than performance chasing.
(0:22:32) Why ETF investors highly value intraday liquidity, even if most do not actively trade.
(0:23:27) Research on ETF trading behavior among younger investors and retail participants.
(0:27:11) The massive shift from actively managed U.S. equity mutual funds toward indexed products.
(0:27:51) How financial advisors increasingly use model portfolios built around ETFs.
(0:31:20) Why active ETFs exploded in popularity after the ETF rule streamlined launches.
(0:32:31) The growing distinction between ETF wrappers and investment strategies themselves.
(0:33:05) Leveraged and niche ETF products, investor choice, and financial education.
(0:35:48) More than half of U.S. households now own regulated investment funds.
(0:36:41) How 401(k) plans dramatically increased middle-class participation in capital markets.
(0:39:16) Households remain the dominant owners of mutual fund assets.
(0:40:28) The demographic profile of the typical mutual fund-owning household.
(0:41:16) ETF-owning households tend to skew younger, wealthier, and more risk tolerant.
(0:42:03) Mutual fund assets continue to grow despite persistent outflows toward ETFs.
(0:43:39) How investor risk tolerance changes with age and market conditions.
(0:46:22) Economies of scale and the continued decline in fund fees.
(0:47:51) Interval funds, BDCs, and the rise of regulated private credit products.
(0:49:36) Redemption caps and liquidity management inside interval funds.
(0:52:51) Shelly reflects on the enduring popularity of the Investment Company Fact Book.
(0:55:05) Shelly’s definition of success: raising children who tell you they love you.
Read The Transcript:
Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We're hosted by me, Benjamin Felix, Chief Investment Officer, and Dan Bortolotti, Portfolio Manager at PWL Capital.
Dan Bortolotti: Welcome to episode 410.
Ben Felix: Yeah, so in this episode, we're joined by Shelly Antoniewicz, who I met in New York City when she was on a panel that I was moderating. Shelly is the Chief Economist at the Investment Company Institute, or ICI. So ICI is a trade association representing the asset management industry and the individual investors that they serve.
And as a group, they advocate for policies that strengthen capital markets and democratize access to them for the benefit of long-term individual investors, saving for retirement and other financial goals. They do a ton of research, which Shelly leads that team, on the structure and trends of the ETF mutual fund industries on financial markets in the U.S. and around the world. And Shelly contributes to analysis on financial systemic risks and conducts economic analysis on the impacts of proposed laws and regulations governing funds.
She's been with ICI since 2005, serving as Senior Economist, Senior Director of Industry and Financial Analysis and Deputy Chief Economist and prior to that, she spent 13 years as a staff economist and senior economist at the Federal Reserve Board. And Shelly's got a PhD in economics from the University of Wisconsin Madison. I don't know if listeners will be familiar with this or not, but they should be and we'll put a link to it in the description.
ICI produces this massive document every year called the Investment Company Fact Book. It is the most comprehensive overview of the global fund industry, drills down deepest on the U.S. market, which is their focus, but it's got data for fund markets all around the world. So it looks at things like the split between active and passive, the split between ETFs and mutual funds, the changes in those things over time, lots of other really interesting stuff.
So I've pulled data from that report for lots of my videos. And we mostly talked about things that are in that report with Shelly.
Dan Bortolotti: Yeah. And I think the interesting thing about this book is that even though it contains enormous amounts of data, it also has a lot of commentary and it has a lot of narrative in it. And it looks at some of the reasons behind the trends and the data that's being observed.
So it's not just the numbers. There's also a lot in there about insights into the industry. And we talk a lot about that during the course of our conversation.
Ben Felix: Some pretty crazy data points on how much of the global capital market is held in funds, mindblowing, it's fascinating stuff. And then yeah, like you said, Dan, explanations for why it's like, here's the data, look how much of this thing has changed over time. But then it comes with lots of interesting commentary about here's why that happened.
Really interesting conversation, covering the global ETF and mutual fund markets and lots of interesting related points. Let's jump into it. All right, let's go to our conversation with Shelly Antoniewicz.
Shelly Antoniewicz, welcome to the Rational Reminder podcast.
Shelly Antoniewicz: Great. Thank you so much for having me. I'm really, really excited to be here today.
Ben Felix: We're excited to be talking to you. We're talking a lot about funds. Can you talk about what proportion of the global financial markets are held by regulated funds?
Shelly Antoniewicz: So regulated funds, which you could think about as mutual funds, ETFs, closed-end funds. And that also includes UCITS, which are really important overseas. They're operated very much like the US mutual fund.
So that's what I mean when I talk about the regulated fund space. So regulated funds are super important. They're a really important conduit for allocating capital globally.
They help finance businesses and governments and households, even car loans, mortgage loans. And at the end of 2025, worldwide capital markets. So if you think of the value of equity and debt securities outstanding, that was $313 trillion.
Regulated fund assets accounted for 28% or $88 trillion.
Ben Felix: Holy smokes.
Shelly Antoniewicz: People use these funds to invest their hard-earned savings. And it goes through, and it is allocated out to finance real world growth.
Dan Bortolotti: Wow. Can you give us an idea of roughly how many funds there are in the US market? I imagine it's an enormous number.
Shelly Antoniewicz: It's pretty big. Yeah. There are almost 17,000 in what we call them investment companies offered by US financial services companies at year end 2025.
And this number kind of moves up and down. You can think about investment companies as, again, just what I said, mutual funds, exchange traded funds, closed-end funds, unit investment trusts. And some products become more popular.
So their numbers grow. Others become less popular. Their numbers decline.
So we've been roughly around 17,000 for a while.
Ben Felix: Okay. That's interesting. The number of mutual funds might decline, but the number of ETFs increases, that kind of thing?
Shelly Antoniewicz: Yes.
Ben Felix: Yeah, interesting. $88 trillion roughly in global funds. What proportion of total fund assets are in equity funds?
Shelly Antoniewicz: Well, we do have that for global, but I want to talk about for the US because they're the biggest. And so US registered funds, they're really concentrated in equity. So US equity funds alone have $27 trillion or 61% of all US registered funds total assets.
Ben Felix: Wow. Wild.
Dan Bortolotti: It's interesting. That's a sort of classic 60-40 stock bond breakup. Turns out industry-wide, it actually is similar.
Shelly Antoniewicz: Isn't it? Yeah, it just does sort of end up that way. For the US, most of that's going to be in US equity funds of that $27 trillion.
You got $21 trillion in US equity, primarily shares of US corporations, and then world equity. So those that invest significantly in shares of non-US corporations, they're accounting for another $6 trillion.
Dan Bortolotti: And how is the share of the overall market that's allocated to index funds changed over time?
Shelly Antoniewicz: That's definitely increased. So the popularity of index funds has increased over time. Investors have been using them more and more.
This growth, we've seen through both the mutual fund side. So index mutual funds have grown in popularity as well as index ETFs. So at the end of 2025, 52% of mutual funds and ETFs together, 52% of mutual funding ETF assets were in index ETF and index mutual funds.
So a little over half.
Ben Felix: People hear that statistic and think that over half of the overall market is owned by index funds. What's the proportion of the overall US stock market that's held by it?
Shelly Antoniewicz: So that's a lot lower. People think when they hear half of bond assets are indexed, they think it's the market, but it's not because you've got equity index funds and you also have bond index funds as well. So if you look at the US equity market between index mutual funds and index ETFs, it's 19% of the US stock market is in index.
11% is actively managed domestic equity mutual funds and ETFs. And then you got another 70% out there, that's all the other investors. These notions that index mutual funds or index ETFs are taking over the US stock market really aren't borne out by the data.
I mean, that share is increased. No denying that. If you go back to 2015, the share of index mutual fund in ETFs, holdings in the US stock market, that was 11%.
Now it's up to 19. So it is growing, but it is nowhere near the driving force behind the US stock market.
Ben Felix: Some of the other investors could be in non-fund indexed strategies, but the numbers still.
Shelly Antoniewicz: Absolutely. There's CIT's collective investment trust. There's other strategies that could follow.
If you have a separately managed account that you want to customize around the S&P 500, say you don't want some of the stocks that are in the S&P 500, but you want 400 of them, yes, you can certainly do that. And there is that sort of indexing in there, but there isn't any way for us to track that. We can track what's in index mutual funds and index ETFs.
Dan Bortolotti: So there's no question that the share of index fund ownership is increasing. And wondering what you feel the effect is of that trend on overall financial markets, both positive and negative.
Shelly Antoniewicz: This was a topic of conversation that we had at a recent Vanguard event up in NYC and Dan moderated the panel. When I think about this question, I like to look at what has been done by academics that have researched this area. And so when I look across the academic literature, I don't see one single unified conclusion about how index investing is affecting financial markets.
The findings are mixed and in several cases, they point in different directions. So sort of the opposite conclusions. One example I have is a recent paper by Valentin Haddad and Paul Huebner and Erik Loualiche.
I'm not sure I'm saying that right. And that was published in the AER last year. And that paper, it argues that the growing share of index investing has made demand for individual stocks less elastic.
So that kind of just means that markets react less strongly to either mispricing or arbitrage opportunities. So that's what they found for individual stocks. But then they go on and they continue to do work.
The same authors conclude that active investors still play a central role in price discovery. And that the market has not become meaningfully less competitive as indexing has grown. So these are sort of two opposite conclusions within the same paper.
They aren't contradictory to each other. It's just that yes, you can have a little bit less elasticity, a little less quick reaction. But you still have the same result that we have had, which is very efficient US capital markets.
There's also this other literature out there. I like to look and I like to think to myself, what is the basic principle? The basic principle to me is that when you get news that comes in and you reassess what you think is going to be the returns you expect to get in the future, either for a single company or for a sector or something, and you get negative news that comes in, you change your expectation about what you think.
Those returns are going to go down. You can change, you can reassess, you can trade on that. Also, the opposite direction, if I think that AI is going to take over the world and we're going to have huge productivity gains and we're going to need a lot of this infrastructure.
I may want to invest in these companies really strongly. And that's how you get these sort of either superstar firms or these mega firms. It's all about the fundamentals driving the long run valuations and not coming from the fact that my 401k participant is putting some money in the S&P 500 index every two weeks.
Ben Felix: We talked earlier about the number of funds in the US. How many fund sponsors are there in the US market?
Shelly Antoniewicz: We do track this and a lot of the information that I'm quoting is from our Investment Company Fact Book. We just published that a couple weeks ago and at year end 2025, we had almost 770 fund sponsors. Now, this has come down over the last 10 years.
It's down about 100 fund sponsors.
Dan Bortolotti: What proportion of those are actually taking in new money each year and does that vary depending on whether they're mutual fund or ETF sponsors?
Shelly Antoniewicz: It does vary. Yes. So we track this also by long-term mutual funds and by ETFs.
ETFs have been a very popular product and they're growing and they last year in 2025, they got $1.5 trillion in net new cash flows. So a tremendous amount of money came into ETFs and that's reflected in the percentage of fund sponsors that received new money and that was 90%. 90% of ETF fund sponsors received net new cash flow in 2025.
And this sort of contrasts with the long-term mutual funds, only 31% of long-term mutual fund sponsors or fund complexes received net new money.
Ben Felix: That's super interesting. Good time to be in the ETF business, I guess.
Shelly Antoniewicz: It's also interesting because many complexes are agnostic between the product. They offer both mutual funds, they offer both ETFs, they're selling more strategies and investment. They could care less about the wrapper.
It's whatever people want. You want an ETF wrapper, you feel more comfortable with that, you feel more comfortable with the mutual fund wrapper, we have both.
Ben Felix: Yeah, interesting. So the consumers are really choosing the ETF wrapper more, it sounds like.
Shelly Antoniewicz: Yeah, and we've seen the move from the mutual fund product to the ETF product outside the 401k space for the last 15 years and that is really coming through the financial advisory channel.
Ben Felix: How has the concentration among the largest fund sponsors evolved over time?
Shelly Antoniewicz: The industry's become more concentrated so that the largest five complexes at year end 2025 had 58% of mutual funding ETF assets. If you think about 10 years ago in 2015, that's up from 45%. We see a similar increase when you look at the top 25 complexes.
Top 25 complexes, they had 86 percent of the mutual funding ETF industry at the end of 2025 and that was up from 75%.
Dan Bortolotti: What are some of the reasons why assets are concentrating so much in those largest fund complexes?
Shelly Antoniewicz: We talked about the number of fund sponsors and I had noted that they've dropped by over 100 fund sponsors have exited the fund industry in the last decade while certainly economic factors have contributed to this. The heightened regulatory environment has also had an impact. Mutual funds and ETFs have more rules and regulations to comply with than ever before and honestly compliance costs are tough for small and even mid-sized fund companies.
So these costs become easier to bear the more assets that the firm has under management and that's why we will see periodic waves of mergers across fund companies. I had mentioned like the largest five or the largest 25 complexes. If you look over the past decade with some exceptions, those aren't the same set of firms.
Some firms have merged or two middle market firms have merged to become a larger fund complex and some of this is because when they do merge like that, they get these economies of scale and the compliance costs are easier. It's also harder for small fund companies to come in because of the compliance hurdle.
Ben Felix: How concerned do you think investors should be about rising fund complex concentration?
Shelly Antoniewicz: Even though that the industry is becoming more concentrated, it is still intensely competitive. One way I like to look at how competitive the industry is is by looking at our annual research report, ICI publishes a research report every year on fund fees and on an asset weighted basis, average expense ratios by mutual fund investors, they've fallen substantially. They've continued to fall.
So if you think about in 2000, so 25 years ago, equity mutual fund investors paid on an asset weighted basis, 99 basis points for an equity mutual fund. Now on an asset weighted basis, it's 40 basis points. So 60% decline, hybrid mutual fund expense ratios have also declined by a lot over this period as well.
And then ETF expense ratios have come down too. So everybody assumes that ETFs are always cheaper than mutual funds and that's not the case. ETFs have also expanded into different asset classes.
Even if you were to look at the same asset class, it is not a given that the ETF will always be cheaper than the mutual fund. You have to do your due diligence. Certainly because scale matters. So economies of scale have big impacts on expense ratios.
So a large mutual fund can have a lower expense ratio than a smaller ETF.
Dan Bortolotti: So as we see funds flowing into mutual funds, can you talk a little bit about how market returns affect that? In other words, our investors just chasing performance when they decide where to allocate their mutual fund investments?
Shelly Antoniewicz: When I like to look at investor sentiment, I like to add the mutual funds and the ETFs together because we have seen this move from mutual funds to the ETF product. So you've got to take that secular move into account. So when I'm thinking about investor sentiment, I like to add the two of them together.
When you look at mutual funds and ETFs added together, it is interesting. We will see outflows from mutual funds and ETFs together. When we see two years, a couple years of consecutive, very large increases in US equity prices, that to me makes me think they're rebalancing.
So they might let it run up, but eventually they rebalance. We have other data and I believe it's two-thirds of mutual fund investors outside of their 401ks. So if they're investing in mutual funds outside their 401ks, they use a financial advisor and ETF investors as well.
And I think that one's lower because we have a lot of sort of do-it-yourself ETF investors, but I believe about half of ETF investors, retail ETF investors use a financial advisor. So that's going to help with retail investors saying, look, I let this run up. I need to rebalance out of that.
It is interesting. I like to look at our weekly fund flows that we publish. I was looking at them intensely after the US Iran conflict started and the US stock market took a bit of a nosedive.
We saw a few weeks of outflows, very modest outflows, but then when it hit sort of that bottom and then started moving up, quite a bit of money. We saw a turnaround where between mutual funds and ETFs, we saw pretty substantial inflows into US equity funds.
Ben Felix: Do you see any differences in the flows and the market flow response between ETFs and mutual funds?
Shelly Antoniewicz: That one's really hard because of this secular move that we've seen between mutual funds and ETFs. So I can't really answer that. That's why I always add them together.
On the bond side, what I will say is when you look at fixed income, we're not seeing as much of an out shift from the mutual fund to the ETF product. Both products, mutual funds and ETFs are receiving inflows right now, pretty substantial, pretty big inflows. I will say that the ETF product is receiving more inflows than the mutual fund product.
Dan Bortolotti: Now, one of the big differences between mutual funds and ETFs, of course, is intraday liquidity. So you can trade an ETF throughout the day, whereas mutual fund orders are filled at the end of the day. How important is that intraday liquidity to ETF investors?
Shelly Antoniewicz: So we do surveys of ETF owning households. And we ask them questions about why do you invest in ETFs? We give them a set of responses so they can either say for retirement, cost effectiveness of ETFs, diversification of investments through ETFs, or the ability to sell ETF shares anytime during the day.
And they can check any one of these boxes. They're not exclusive. So if all of those things are factors for why they invest, they can check all four of them.
And 91% of our ETF owning households say that they appreciate their ability to sell their ETF shares anytime during the day. So it's an important feature for them.
Ben Felix: I'm surprised it's that high. Does that support John Bogle's concern that he always had about ETFs being vehicles for active trading?
Shelly Antoniewicz: Well, just because investors say they appreciate the ability to trade intraday doesn't necessarily mean that they do it. They just like that option. Of course, I'm going to like anything that gives me an extra option.
I went and looked at some other external data and I found NASDAQ's 2025 ETF Retail Investor Survey. You guys probably have seen it already. And it does show that while retail participation in trading ETFs or trading in the markets has increased, my opinion of it is that it still remains pretty small overall.
ETF retail investor trading is about 6% of total ETF volume according to their information. The one thing that they did find though is that younger cohorts like Gen Z are trading ETFs more frequently. About half of their Gen Z sample was trading weekly and one quarter was trading daily.
Is it a bad thing? They're younger. They're getting experience with the investment markets.
They're trying to put some money to work. Other parts of the NASDAQ survey shows that nearly 70% of retail ETF holders, they're prioritizing risk, market conditions, and price trends when they're researching investments. So that long form content engagement is up and it suggests that they're moving towards really trying to understand how ETFs can work for them and help them to build their wealth.
There's also another paper that was recently published in the Journal of Financial Stability. It's called Diversification or distortion? The role of ETFs in retail investor portfolios and performance, because that's really what you care about if they're trading a lot, but are they doing well or not doing well? Most market timing, yeah, we tell people, please don't market time.
Most often it's not going to work for you, take a long view. At some point though, but then we tell them you got to rebalance. So there's got to be an in-between.
So this paper by these authors, it looks at how ETF adoption affects retail investor performance. And it uses actually this really interesting panel of over 500,000 Finnish investors, probably because we don't have this data over here in the US, but they track them from 2007 to 2022. They find that the ETF adopters, at least in Finland, tend to be older, male, and more active, but they hold smaller but better diversified portfolios.
They say first time what their analysis is showing is that first time use of ETFs yields statistically significant improvements in risk adjusted returns. ETF users demonstrate greater portfolio resilience during financial crises. There's both ways.
I think what's great about the US capital markets is our freedom. Our freedom to choose investments, our freedom to put our money where you yourself think you should put it based on your own risk tolerance and your own goals.
Dan Bortolotti: So we've talked to guests about money flowing into index funds in higher numbers. The corollary of that, presumably, that funds are flowing out of traditionally actively managed funds. And can you talk a little bit about just how significant that outflow has been over the last decade or so?
Shelly Antoniewicz: It's been very significant. So if we look over the past 10 years, index, US equity mutual funds and ETFs have received almost $3 trillion in net new cash flows and reinvested dividends. That's quite a bit.
On the flip side, actively managed US equity mutual funds have experienced outflows of $3.4 trillion. It's almost like a mirror image.
Dan Bortolotti: So it's not product specific.
Ben Felix: Do we know where those dollars have gone? Do we know they've flowed from active into passive?
Shelly Antoniewicz: We don't know for sure because we don't track individuals. We can only see the patterns from just what the aggregate data is showing us. And then we look at other information that's out there.
And one of the pieces of information that's out there is some data that's been published by Cerulli. They've been doing this for quite a long time. They've been publishing data on where fee-based advisors and full-service brokers are putting their household clients assets in what products are they putting their household client assets in.
And we like to look at this in sort of 10-year windows and the latest information that Cerulli has out when we published our Fact Book was for all of 2024. So if you think about fee-based advisors back in 2014, they had 72% of their household clients' assets invested in mutual funds. As of 2024, so 10 years later, only 46% of their household clients' assets were invested in mutual funds.
The flip side of that is there is now 49% of those household client assets are invested in ETFs. And that's up from 17% in 2024. The financial advisory community is moving from this traditional mutual fund or active mutual fund product over to the ETF product index, largely index-based ETFs, although we have heard that advisors are also very interested in active ETFs, which have been growing in the last couple years.
Ben Felix: That's really interesting. Do you know from, I don't know, surveys or anything like that, why that shift is happening?
Shelly Antoniewicz: It is more talking with advisors themselves. So not only in the last 15 years, 20 years have funds themselves come under cost pressure. Advisors themselves have also come under cost pressure.
So they are constantly being asked by their clients, okay, what have you done for me lately? What is your value added here? And many advisors have decided that one way that they can show value is by signing up or getting these model portfolios.
And they sign up for these model portfolios, and then they are taking on allocating the clients' assets into say index ETFs according to a model portfolio. And then the model portfolio changes, then they rearrange their clients' assets. They also were under pressure to show how they could provide value.
And one way to do this is to say, okay, I'm going to manage your portfolio and I'm going to use these index ETFs to do this. Could have used index mutual funds, same thing, but it's a shift from an active product to an index product.
Dan Bortolotti: Why do you think that there were so many new ETFs created in 2025 relative to past years?
Shelly Antoniewicz: 2025. I think what we've seen since the ETF rule was adopted in late 2019. So all the way from like 2020 through 2025, we've seen more and more and more ETFs come out.
And that's because the process for launching ETFs that rule helped streamline that process. But 2025 was active ETFs, extremely popular. There were a lot of fund complexes coming out with an active ETF product.
Dan Bortolotti: Just as a follow up on that, it's interesting that a big reason why so many investors shifted from mutual funds to ETFs historically, of course, has been exchanging active management for traditionally passively managed ETFs. That hasn't been true for a long time, it sounds like. I mean, that's still part of the trend.
But I guess what I mean is this idea that exchanging mutual funds for ETFs is a move from active to passive, just doesn't seem to be true anymore. And that a lot of people moving to ETFs are moving because they just want active strategies with a different wrapper.
Shelly Antoniewicz: And again, I think I said it before, many of the companies that are offering these active strategies and these active ETFs are saying, look, we're offering you a strategy. We're offering you an investment solution. We're agnostic as to whether you want that in the mutual fund wrapper or the ETF wrapper.
Ben Felix: There's been some pretty interesting products launched as ETFs. I find stuff like leveraged single stock ETFs to be just wild that those are out there. I think that's a big part of why there are so many new ETFs.
Shelly Antoniewicz: I don't know. I think those are maybe one offs. They get a lot of attention because they are new, they are different.
But I think if you look at the vast bread and butter of ETFs that have come out in the active space or even the index space, it's your standard general strategies that you see - an active large cap strategy or an active small cap strategy. I think it is interesting because I've been with ICI over 20 years. And so when mutual funds were growing and were coming out with all different types of products, people said the same thing, exactly the same thing.
My view on it is choice. Choice is a good thing for investors. Are all of the products appropriate for all people?
Absolutely not. But I feel strongly investors should be able to decide either on their own or with their financial advisor, which product fits their risk tolerances and their financial goals. And I also think the market decides whether these products are successful or not.
Ben Felix: That's exactly what I was thinking as you were saying that - the market will decide how useful these products are in the long run.
Shelly Antoniewicz: As long as the people are educated on what the product is, as long as there is enough financial education and disclosure on how the product is structured and what it's invested in, I believe people have can then make an informed choice.
Ben Felix: That's the key though, because I think a lot of people do get enticed by investment products without fully understanding what they're getting into. And that's where we can have problems at the individual level.
Shelly Antniewicz: My view on that is that's the other side of the freedom of being able to invest. I could take right now, I could take my 401k and put 100% of it in an equity fund. That might not be such a good idea for me considering my age and how close I am to retirement.
But I have the freedom to do that and it's on me that I made that choice.
Ben Felix: Choice is generally good. It is finding that sweet spot between choice and informed.
Shelly Antoniewicz: As an investor, even if you do get financial advice, you do have to take some responsibility paying attention to it.
Ben Felix: What proportion of US households own investment funds of some kind?
Shelly Antoniewicz: So we do a survey every year. It's a very large survey. We contact between 8,000 to 9,000 US households to ask them what kind of funds, if they own funds and what kind of funds they own.
In 2025, we found that 56% of US households own shares of mutual funds or ETFs or closed-end funds or UITs. So to take that 56% and put it in context, that's 76 million households.
Ben Felix: I can't decide if that's a low number or a high number. I don't know what I was expecting.
Dan Bortolotti: Seems like a high number, right?
Shelly Antoniewicz: Pretty big number.
Dan Bortolotti: What effect do you think that regulated funds like ETFs and mutual funds have had on financial market participation and democratization, if you will?
Shelly Antoniewicz: I think it's been just great. I mean, regulated funds have introduced millions of US households to investing and they've become a well-established and reliable investment vehicle for middle-class families. In many of these middle-class families, they get their first exposure to investing through their 401k.
But if you think about it, sort of the share of middle-income households that own US registered investment funds, that increased from 46% in 2005 to 59% in 2025. So increasing in the biggest increase that we see is sort of in this what we call second quintile income. So to explain that to you, what we do is we take all the income ranges and we split them into five groups from lowest to highest.
The second group is really not very high-income earners and their participation or their ownership of regulated funds increased from 24% in 2005 to 43% in 2025. These people are participating in the US capital markets and they're doing this largely through their 401ks.
Ben Felix: Wow. So the 401ks have been a big push toward financial market participation.
Shelly Antoniewicz: Yes, absolutely.
Ben Felix: Interesting.
Shelly Antoniewicz: And if you think about it, employer-sponsored retirement plans, 401ks are often sort of the gateway to mutual fund ownership outside their 401k. So when we look at all mutual fund owners, 65% of them that are owning outside their 401k, they purchase their first fund through their 401k.
Ben Felix: Interesting. So it's a gateway makes people comfortable maybe.
Shelly Antoniewicz: They get comfortable with investing. They see the benefits of compounding. They see the benefits of putting a little bit of money away every couple of weeks and it can grow over five years, 10 years.
And that prompts them then to save outside their 401ks. It makes them more comfortable with investing in the capital markets.
Dan Bortolotti: So is it fair to say that the primary owners of mutual funds and ETFs are households as opposed to institutional investors?
Shelly Antoniewicz: It is. It's much more so for mutual funds than ETFs. If you think about households, they hold the vast majority of mutual fund assets, particularly what we call long-term mutual funds.
So this is your stock and bond mutual funds. At the end of 2025, households held 22 trillion in stock and bond mutual funds. The total amount in stock and bond mutual funds is 23.6 trillion. So about 90% I think if I had to do the math.
Dan Bortolotti: Virtually all of them have.
Shelly Antoniewicz: ETFs started. You have to remember when they came on the scene over 30 years ago, they were more of an institutional product. And then they had slowly moved to be more retail, particularly in the last 15 years. We estimate that about half of ETF assets are held by retail investors.
Ben Felix: What is the average or typical mutual fund-owning household in the U.S. look like?
Shelly Antoniewicz: They're generally moderate household incomes. They're in their peak earning and saving years. So 60% of U.S. households that owned mutual funds in 2025 had annual incomes less than $150,000. And 52%, a little over half, were headed by individuals between the age of 35 and 64. They're basically your standard middle-class America trying to invest in through their 401k and get some money held outside, say in 529 plans for their kids' college educations.
Dan Bortolotti: So how does that differ from the typical ETF-owning household? Are they a little bit wealthier, younger?
Shelly Antoniewicz: They do. They skew a little younger. Yeah.
I mean, not much. Households, the median age of a head of a household that owns ETFs is 51. That's the median age.
The median age for a household that owns mutual funds is 55. ETF owners have a little bit more income. The median income is 150,000.
Mutual funds, median household income, 125. And also, households that own ETF assets have a bit more financial assets.
Ben Felix: We talked about the number of funds earlier where mutual funds may be declining while ETFs are increasing. How has the split between ETF mutual fund assets evolved over time?
Shelly Antoniewicz: It is interesting because despite all of the outflows that we were talking about from mutual funds, their assets are actually increasing over time. As of year end 2025, assets in mutual funds were around $32 trillion. Assets in ETFs were $12 trillion. At the end of 2025, or closer to $13, I think.
Dan Bortolotti: What's driving the growth of ETFs in that picture? We talked about active to passive being maybe one of the trends, but clearly not the only one.
Shelly Antoniewicz: It's what I talked about before. It's this sort of move by financial advisors that are moving their clients because not only do we see it on the fee-based advisors, we're also seeing it on the broker side, where advisors that are using more of a brokerage model also are moving their clients. It's not quite as fast or as dramatic, but have been moving their clients over to ETFs as well.
Just to go back to that other question, I think also when we think about younger cohorts, the younger generations, they tend to be gravitating towards ETFs. When we look at ETF usage and mutual fund usage, Gen Z definitely seem to want to go towards the ETF product or the ETF wrapper.
Ben Felix: What's the typical risk tolerance of households that invest in funds?
Shelly Antoniewicz: Even though risk tolerance, it can be measured a lot of different ways using survey data, but the way that we, ICI, survey, we ask respondents to choose from a range that describes how much risk are they willing to take to get higher investment returns. If you're a mutual fund owner, you express higher willingness to take financial risk than non-mutual fund-owning households or non-owning households at all. You don't own mutual funds, you don't own ETFs.
And so in 2025, 34% of mutual fund-owning households were willing to take above average or substantial investment risk. This is for above average or substantial gains. You get the risk, you get the gain.
That compares with 15% of US households not owning mutual funds.
Dan Bortolotti: Now, how does that risk tolerance vary over time across household characteristics like income and wealth?
Shelly Antoniewicz: It is interesting. So ETF owning households, they're even more willing to take investment risk than mutual fund-owning households. So same survey, same data 2025, same way we ask the question, we found that 54% of ETF-owning households were willing to take substantial or above average investment risk.
That compares with that 34% of mutual fund-owning households. But how does it vary over time? Well, what we tend to see is that people think about the recent performance in the stock market.
So their willingness to take financial risk varies. It typically rises and falls to reflect the recent stock market performance. So for households that were investing during the financial crisis in 2007-2009, if you remember, the US stock market fell by 50%.
After that, people had a reduced risk tolerance when we were surveying them. They were less willing to take that above average risk or that substantial risk. Risk tolerance also varies by age.
Younger people tend to be much more willing to take investment risk than older households.
Dan Bortolotti: Makes sense.
Ben Felix: You used fees earlier as an example of ongoing competition in the fund industry. Is that the only thing driving fees down or are there other factors?
Shelly Antoniewicz: One of the factors is it is competition definitely, but it is economies of scale. Over time, as we can see more and more people in the US invest in funds. That's more money coming into funds.
The scale of funds, fund sizes have grown. That means their fixed costs such as transfer agency fees or accounting and audit fees, the compliance costs we were talking about. Those can all be spread across a much larger base of assets.
So that also helps to bring down funds expense ratios. Another reason why we look at asset weighted averages and that means where is the money sitting in different types of share classes? We've seen a shift to no-load share classes.
I would say over 90% of mutual fund flows went into no-load mutual fund share classes. That also helps to reduce those asset weighted expense ratios.
Dan Bortolotti: Most of what we've talked about has surrounded open-ended funds, mutual funds and ETFs. Can you talk a little bit about interval funds and business development corporations and how they differ and what role they play in all of this in terms of capital allocation?
Shelly Antoniewicz: Interval funds and BDCs have gotten quite a bit of press lately and their assets have grown. They're nowhere near the size of mutual funds and ETFs. So just to put it into perspective, I'll give you a little some numbers here.
In 2020, BDCs, tender offer funds and interval funds were $140 billion. In 2025, that has increased to $534 billion. That compares to the trillions, the double-digit trillions of dollars we were talking about.
Now, one thing that is why these strategies or these types of vehicles have grown is that they often follow or invest in private credit. So interval funds often invest in private credit and tender offer funds often invest in private equity. So they're following more of the private investment strategies.
Those funds are offered to, you could call them retail investors, they're definitely households, they're retail, but they have to be either accredited or qualified investors for the most part. If it is a listed BDC, and what I mean by that is it's trading on the exchange. I could buy it, you guys could buy it.
Anybody could buy it. If it is a non-listed BDC, you have to meet certain qualifications in terms of your assets or your income to invest in those vehicles.
Ben Felix: What do you think about the risk of private assets? You were just talking about being held in semi-liquid funds like an interval fund that are targeted at retail investors.
Shelly Antoniewicz: You could remember that the interval funds and the BDCs, these are regulated funds. They are subject to the Investment Company Act of 1940. So interval funds, tender offer funds, BDCs come with these automatic built-in protections for investors.
They also have independent boards, they have to do reporting to the SEC, they have leverage limits, and they have other SEC rules that keep the fund managers accountable to investors. Now, I know there's been a lot of recent headlines that have raised questions about whether regulated, what I'm talking about, regulated private credit funds are adequately prepared to manage liquidity, particularly during periods of market stress. And there are recent decisions by fund managers to enforce these redemption caps where you would limit the ability of investors to withdraw their money.
And that these are being portrayed as sign of broader concerns, broader concerns about the product, broader concerns about private credit. The fact is that these funds are doing exactly what they were designed to do. And the careful management of how much investors can withdraw, which for an interval fund is a 5% withdrawal limit every quarter.
That's intentional. And it's a necessary part of how these funds work. The funds are meant for long-term investing and they limit these redemptions accordingly.
They're not a sign of stress, they're a tool to protect investors and these redemption caps or limits are disclosed to investors when they purchase them. So they know upfront, if you want to get your money out, the fund will only in any quarter redeem 5% of its assets. So if everybody wants their money out, you're only going to get 5% of what you put in in any quarter.
People think about are private market assets appropriate for retail investors. I think they have a clear role in a well-constructed portfolio where they sit alongside other investments with different liquidity and redemption profiles. So ideally, investors should rely on a mix of assets that are designed to serve different purposes.
Some are going to provide your liquidity, your stability, got an emergency, you're going to go to that investment. Others are going to offer your potential for higher long-term returns. In exchange for that, you have less immediate access to that cash.
And so that's where private credit or private investments fit. They fit into that second category.
Ben Felix: A lot of it comes back, to, again, understanding what you're buying and what the risks are and what the expected returns are and all that stuff.
Shelly Antoniewicz: And seeing how it works within a broader diversified portfolio and understanding that these investments should not be considered a source of near-term liquidity.
Dan Bortolotti: All right. So we've discussed a lot of the findings and observations in the Fact Book and something you've been working on for a number of years. Overall, what would you say has been the most surprising observation that has come out of your work?
Shelly Antoniewicz: As I said before, I've been with ICI now over 20 years. I think what surprised me the most about the Investment Company Fact Book has been just the reception to it. It has enduring popularity and high profile.
We've just published the 66th edition of our Fact Book. I've only been around for the last 21 of those. I travel around a lot.
I meet a lot of people. I talk with policy makers and regulators, academics across the globe who are thinking or working on issues related to funds. And more often than not, when I say I'm from the Investment Company Institute or ICI, they respond, oh, I love your Fact Book.
It's such a great resource. That kind of praise really reinforces our commitment here in the research department to dedicate our resources to producing it. It takes a lot to put that book together.
It also encourages us to make the Fact Book better. Last year, we added a data visualization tool for our statistical tables that we have in the back of the book. So people can now plot whatever date range they want, whatever series they want.
They can download it, download the figure. They can use it in a publication if they want because it'll have the site and the source on it. Next year, we're planning to refresh the look of the Fact Book and with a new design.
And we're also hoping to move it to a new platform. So all of its features will be able to run faster.
Ben Felix: Cool. I agree with what people tell you. It is a super useful resource.
I refer to it often, and I've used some of the charts in some of my videos to show just what's happening in the fund markets. It's a one-of-a-kind resource.
Shelly Antoniewicz: Thank you.
Dan Bortolotti: We need a Canadian edition.
Ben Felix: A Canadian edition would be very cool. That's probably outside ICI's mandate, though.
Dan Bortolotti: Probably.
Ben Felix: Our final question for you, Shelly, how do you define success in your life?
Shelly Antoniewicz: Well, actually, it has nothing to do with my professional life. I have three sons, they're all adults now. Yesterday was Mother's Day, and all three of my boys told me they love me. I'm a success.
Dan Bortolotti: Love that answer.
Ben Felix: A great answer. All right, Shelly, it has been a great conversation. We really appreciate you coming on the podcast.
Shelly Antoniewicz: Thank you so much for having me.
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