00:00Tell us a little bit about more about the numbers that you were crunching when it comes to mutual fund assets, because they're very much tied to 401ks.
00:08And because of that, they're not going away anytime soon.
00:12No, no. Thanks for having me. So originally, ICI had put out a report showing that ownership among middle income households had risen over 50 percent over the last 20 years or so.
00:26And so what's been happening is if you think that includes both ETFs and mutual funds.
00:31But when you dig a little bit more into the data, as you said, 73 households own mutual funds versus only about 20 million with ETFs.
00:39And so when you look at the 401k plans, you know, mutual fund assets keep growing.
00:44And then when you think about when investors get access to mutual funds, it is actually the younger generation.
00:51So when I say younger, I actually am including Gen X in there over 60 percent access it through 401ks versus only about 35 percent or so of baby boomers.
01:01And so when you think of all the automatic, you know, withdrawals from your account, from your employers and everything like that, they're really poised to continue growing.
01:10Yeah. I mean, you think about this advantage place that mutual funds have in 401ks.
01:16It makes sense, given the proliferation of those funds, that mutual funds clearly reaping the benefits.
01:22I mean, you think about the mutual fund industry, David, they do have this boost from 401ks.
01:27And I wonder, you know, what the introduction of potential ETF share classes in 2026 of existing mutual funds is going to mean for the mutual fund landscape as we get closer and closer to the new year.
01:39I think it's actually going to be a pretty slow rollout.
01:43Aside from DFA, who's hitting the ground running, I think there's a lot of hurdles that a lot of these firms are going to face, you know, whether it's distribution or operational.
01:52I don't think the back end is ready yet.
01:55And so aside from DFA, maybe a couple other firms, I think it's going to be really a waving pattern among a lot of the other firms.
02:01And while we will see a rollout, I just don't expect to be a big thing in 2026 at least.
02:06Okay, this is the question that I think everyone asks, but, you know, we've all known the answer to, which is, do we think that ETFs could ever make it into 401ks?
02:16I don't believe so.
02:18I think the bigger competitor for mutual funds in 401ks is CITs.
02:23Now, CITs have already overtaken mutual fund assets when it comes to just target date funds.
02:28But if you look at the entire 401k plans, mutual fund assets are still greater than CITs.
02:34I think mutual funds have about $5.7 trillion compared to about $3.7 trillion in CITs.
02:40And so, you know, CITs are going to continue to grow, especially when it comes to target dates.
02:44And we all know target dates are the default option on many plans.
02:49And so when it comes to the larger and more, you know, mid to large 401k plans, I think CITs are really going to overtake mutual funds, you know, not next year, not the year after, maybe 10 years from now.
03:00But I think a lot of the smaller plans will still have mutual funds and not CITs just due to kind of operational constraints and the simplicity of having mutual funds.
03:09And so, you know, I think it's going to be a little bit of a little bit of a little bit of a little bit.
Be the first to comment