A Chart Book on Stock Ownership

U.S. capital markets are where investors, small and large, put capital to work to drive innovation, economic growth and job creation. Our markets have long enabled businesses to grow, governments to invest in infrastructure, and individuals to save for retirement and education. The U.S. capital markets are largest in the world and continue to be among the deepest, most liquid and most efficient. U.S. equity markets represent 41% of the $75 trillion in global equity market cap, or $30 trillion; this is 3.8x the next largest market, the EU (excluding the U.K.). The diversity, depth and breadth of U.S. equities markets (all of U.S. capital markets really) enable investor choice.

 

In this note, we provide a chart book of ownership on U.S. stocks (and other assets). Highlights include:

• Americans Responsible for 52% of Retirement Assets. In the U.S., people build their retirement accounts themselves. 52.1% of the $34.6 trillion in retirement assets are individually funded through defined contribution pension plans, IRAs and annuities. This differs from many other countries/regions, where citizens are highly reliant on government funded retirement plans. This section breaks out retirement assets across account types and asset classes, as well as analyzes growth trends in different segments.
• Individuals Own Stocks. It is households that own equities, 37.6% of total equities in the U.S., and equities represent households’ largest financial asset holdings at 38.2%. According to the Federal Reserve, 52% of HHs in the U.S. own stocks (65 million households), which shows the figure is greater than one percent of income earners (estimated at 1.6 million households). Our analysis inside this section shows that the low balance reported by the Federal Reserve – median value of $40 thousand for a household’s stock holdings – demonstrates a much wider universe of Americans own stocks.
• Strong Markets Enable Individual Investor Choice. The diversity across types of investment products and investment focus of these products (region, asset class, style, etc.) is part of what helps the U.S. capital markets maintain a dominant global position. It is also what provides individual investors choice to manage their retirement and other savings accounts in a manner that fits their investment objectives and needs.
• Market Depth and Breadth Enable Portfolio Diversification. Investors need choice in investment products, based on different return profiles and investment objectives. They need diversity within product sets and across investment focus of these products (region, asset class, style, etc.). U.S. equites markets provide this opportunity, as shown in the S&P 500 analysis in this section.

 

 

Author

Katie Kolchin, CFA
SIFMA Insights