Investment management is a broad term for the professional management of various securities, including shareholdings, bonds, and other assets such as real estate, to meet specified investment goals for investors. The US investment management industry is vast, with over 16,000 investment companies reporting to the Investment Company Institute in 2022. The industry is not very concentrated, with the five largest asset managers holding 22.7% of externally held assets. However, the number of investment companies has decreased since 1997, despite some fluctuations.
The industry employs thousands of people, including fund managers, researchers, compliance staff, internal auditors, financial controllers, and more. Investment managers are responsible for constructing asset allocations and separating individual holdings to outperform certain benchmarks. They use research and analysis to identify valuable opportunities and make informed decisions, ensuring portfolios align with client targets and risk tolerance.
The US remains the biggest source of funds, accounting for around half of the conventional assets under management globally. The industry is facing various challenges, including the impact of market valuations on revenue, the difficulty of sustaining above-average fund performance, and the high cost of successful fund managers. However, it is also evolving with the increasing use of artificial intelligence and other technologies to enhance efficiency and performance.
Characteristics | Values |
---|---|
Number of investment companies reporting to ICI | 16,159 |
Gender ratio | Male - 78% Female - 22% |
Racial demographics | White - 65.4% Hispanic or Latino - 12.7% Black or African American - 7.6% American Indian and Alaska Native - 0.6% Asian - 9.0% |
Average age | 40+ years |
Average salary | $138,326 in Alaska |
Most common degree | Bachelor's degree - 71% |
Employment | Most work for a private company in the finance industry |
Company size | 500 - 1,000 employees |
Language spoken | Spanish - 33.3% French - 22.2% Malay - 11.1% |
What You'll Learn
Investment companies reporting to the Investment Company Institute
The Investment Company Institute (ICI) is a non-profit organization that represents regulated investment funds in the United States. ICI's members include mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs). The ICI also represents its members as investment advisors to collective investment trusts (CITs) and retail separately managed accounts (SMAs).
According to Statista, the number of investment companies reporting to the ICI in the United States was 16,159 in 2022, down from 1997. These companies' assets represent 98% of investor assets. Investment companies include mutual funds (including funds that primarily invest in other mutual funds), closed-end funds, exchange-traded funds, and unit investment trusts.
ICI collects and analyses data on the US retirement market, including defined contribution plans and individual retirement accounts, and informs discussions on retirement and tax policy. It is the primary source for statistical data on the investment fund industry, publishing research on industry, retirement, and investor trends, including the Investment Company Fact Book.
ICI also provides educational resources, such as a glossary of investing terms, and hosts events like the ICI Innovate Conference, which explores emerging technologies' impact on fund operations and the industry.
In addition to its role in the investment industry, ICI also addresses broader economic and social issues. For example, it has published content on the importance of voluntary retirement plans and their relationship to Social Security, as well as the need for EU markets to adopt the US and Canadian shift to T+1.
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Gender ratio
The gender ratio in the US investment management industry is heavily skewed towards men. According to one source, only 10% of all US investment managers are women. Another source gives a figure of 22.1% of investment fund managers being female, with male fund managers making up 77.9%.
The gender disparity is also evident in the senior leadership positions within the industry. Women account for less than 17% of senior leaders in investment banking, and only 9% of senior executives in private equity, according to reports by Catalyst and Preqin, respectively. At hedge funds and private debt firms, women hold just 11% of leadership roles.
The gender gap is not limited to the investment management industry but is also prevalent in financial management and investment services more broadly. According to Deloitte, only six out of the 107 largest financial institutions in the US were run by female CEOs in 2019. This pattern persists in other areas of the financial sector, with women comprising just 8.2% of CEOs in S&P 500 companies in 2023.
The disparity is not due to a lack of women in the industry but rather their underrepresentation in leadership roles. Women and men tend to start their careers in finance at similar rates, but men are more likely to advance to senior positions faster. For example, in venture capital, only about 15% of "check writers" were women as of 2022, and companies founded by women received just 2% of all venture capital investment. In private equity, women held 21% of managing director-level operating positions at the end of 2022.
The reasons for the gender gap in the industry are multifaceted. One factor could be the lack of female role models and mentors in finance, making it more challenging for women to navigate career paths to top roles. Work-life balance concerns and a lack of manager support have also been cited as contributing factors. Additionally, women in the industry may face biases and be subject to gender discrimination, which can hinder their advancement.
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Racial demographics
The racial wealth gap in the US is a well-documented phenomenon, with white households owning at least five times the wealth of minority households. This disparity is also reflected in the racial demographics of investment managers in the US.
According to 2024 data, the most common ethnicity among investment fund managers in the US is white, comprising 65.4% of all investment fund managers. This is followed by 12.7% who are Hispanic or Latino, 9% who are Asian, 7.6% who are Black or African American, and 0.6% who are American Indian or Alaska Native.
These racial disparities in the investment management profession contribute to the broader racial wealth gap. The underrepresentation of minority groups among investment managers may be a result of various factors, including historical discrimination, unequal educational opportunities, and limited access to financial markets and intergenerational wealth transfers for minority households.
Furthermore, the racial wealth gap has been exacerbated by differences in saving behavior and choice of assets. White households tend to hold more risky, higher-yielding assets, while minority households have lower participation in financial markets and tend to favor more conservative investments, such as real estate and insurance.
The lack of diversity among investment managers can have broader economic implications. It may contribute to slower wealth creation for minority communities and perpetuate existing wealth inequalities. Addressing these disparities and increasing opportunities for underrepresented groups in the investment management profession is crucial for fostering a more inclusive and prosperous economy.
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Average age
The average age of investment managers in the US varies depending on the specific role and industry. Here are some estimates for different positions:
Investment Fund Managers
According to Zippia, the average age of investment fund managers is 40+ years, representing 71% of the population. This suggests that a significant portion of investment fund managers are in their 40s or older.
Hedge Fund Managers
Similar to investment fund managers, Zippia reports that the average age of hedge fund managers is also 40+ years, with 71% of the population falling within this age group. This indicates that many hedge fund managers are also in their 40s or above.
Investment Analysts
Zippia estimates that the average age of investment analysts is slightly lower at 39 years old. This suggests that investment analysts tend to be in their late 30s or early 40s.
Financial Advisors
According to Finance Strategists, the average age of financial advisors in the US is 44 years old. The majority (62%) are above 40 years old, while 27% are between 30 and 40, and 10% are between 20 and 30.
Investment Bankers
While there is no definitive data on the average age of investment bankers, sources suggest that age can be a significant factor in hiring decisions. Investment banking tends to favor younger candidates, and it may become challenging to break into the industry after a certain age or level of experience. However, there are exceptions, and some individuals in their 40s or older have successfully transitioned into investment banking roles.
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Education
Designations such as the Chartered Financial Analyst (CFA), Chartered Investment Manager (CIM), and Certified International Investment Analyst (CIIA) are increasingly sought after by employers. Enrolling in and partially completing exams for these certifications can even be advantageous when applying for entry-level positions.
Additionally, a graduate degree, such as an MBA, MSF, or a more specialised Masters in Investment Management, may be required for senior roles and is becoming more common for entry-level roles as well.
The knowledge and skills gained through these educational pathways provide a strong foundation for a career in investment management. However, it's worth noting that some sources suggest that no particular qualification guarantees above-average returns on investments. Instead, practical experience and a proven track record of successful investments may be more highly valued by clients.
Skills
In addition to formal education, certain skills are essential for investment managers to possess. These include analytical and research abilities, critical thinking, problem-solving, creativity, teamwork, and flexibility.
Investment managers also need to have a deep understanding of the industry, including knowledge of various investment vehicles, such as mutual funds, exchange-traded funds, and real estate investment trusts. They must stay up-to-date with market trends, regulatory changes, and new technologies, such as artificial intelligence, which is playing an increasingly significant role in the industry.
Continuous Learning
The investment management industry is dynamic and ever-evolving, so investment managers must commit to continuous learning and professional development. This may involve staying abreast of industry publications, attending conferences and workshops, and networking with peers to exchange knowledge and best practices.
By prioritising education and skill development, investment managers can enhance their performance, make more informed decisions, and ultimately, better serve their clients.
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Frequently asked questions
There were 16,159 investment companies reporting to the Investment Company Institute in the US in 2022.
78% of investment fund managers are male, and 22% are female.
The average age is 40+ years, representing 71% of the investment fund manager population.
65.4% of investment fund managers are White, 12.7% are Hispanic or Latino, 9% are Asian, 7.6% are Black or African American, and 0.6% are American Indian and Alaska Native.