Americans are putting a bigger share of their nest eggs into mutual funds than ever before. Mutual funds are swelling in 401(k)s and other...

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NEW YORK — Americans are putting a bigger share of their nest eggs into mutual funds than ever before.

Mutual funds are swelling in 401(k)s and other plans offered by employers, according to a survey published recently by the Investment Company Institute (ICI), a mutual-fund trade group.

About a quarter of the $12.9 trillion U.S. retirement market was in mutual funds at the end of 2004, a record and about a percentage point higher than a year earlier.

Mutual funds managed a record $1.5 trillion in individual retirement accounts in 2004, though the percentage of mutual funds in IRAs has dipped since the late 1990s with the rise of securities held in brokerage and separately managed accounts.

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“Each year, what’s striking is what a large pot of money it is,” Sarah Holden, senior economist at ICI, said of the overall retirement market. “People are saving little by little, and even through the ups and downs of the market you see inflows to mutual funds which shows a commitment to saving.”

Particularly popular are “lifestyle” and “lifecycle” funds. Lifestyle funds are geared toward different levels of risk, and lifecycle funds reallocate assets over time to meet goals set for a target date. About $103 billion was invested in lifestyle and lifecycle funds at the end of 2004, and two-thirds of those assets were held in retirement accounts, the survey reported.

ICI said that the biggest slice of the retirement market is made up of individual retirement accounts, which held $3.5 trillion at the end of 2004.

Traditional IRAs are most popular, funded with rollovers from employer-sponsored retirement plans and contributions.

Second only to IRAs are defined-contribution plans, which held some $3.2 trillion in assets at the end of 2004, according to ICI. Of these, 401(k)s were most prevalent, growing 13 percent between 2003 and 2004 to $2.1 trillion at the end of last year.

Other kinds of defined-contribution plans — including 403(b)s offered by many educational institutions and nonprofits, and 457 plans offered by state and local governments — held $1.1 trillion at the end of 2004, a 12 percent rise over 2003.

Old-fashioned pensions, or defined-benefit plans, haven’t vanished. ICI said they held $1.8 trillion at the end of 2004, while federal, state and local government plans had a combined $3.1 trillion.