Source: US Z1 Flow of Funds, Federal Reserve

  • The ownership of US equities has changed significantly since WW2. In 1945, US households owned 95% of all US equities directly. By 2016 that figure had gone down to just 40%. However, households are still the largest owners of US equities direct.
  • Between 1945 and 1985, households switched from directly owning some of their equities to owning equities through pension funds. While in 1945, pension funds had pretty much 0% holding of equities, by 1985 that number had gone up to 27%. Thereafter, pension fund holdings of equities has declined to 15%. In 2016, pension funds are only the 4th largest owner of US equities.
  • After the mid 1980s, with the financialization of the US economy in full bloom, households started investing in mutual funds and closed end funds, and later on ETFs. Mutual funds/ETF holdings of equities rose from just 6% in 1985 to 29% now, and they form the second largest holder of US equities. The share of ETFs rose especially rapidly after 2000.
  • Foreigners’ holdings of US equities also substantially increased after the early 2000s with the process of globalization taking speed and especially so after China entered WTO. As a % of total, foreign ownership of US equities doubled from 7.5% in 1999 to 15% now. Even though foreigners have been net sellers of US equities in the last couple of years, they still represent the 3rd largest holder.
  • The US government has been a holder of US equities since 1996 mostly through state and local governments. In 2008 the federal government acquired some equities as part of the bailout program after the 2008 financial crisis. The Fed also bought equities in 2009 and 2010. Both the federal government and the Fed have been selling equities since then.
  • Banks and insurance companies are the other holders of US equities but their holdings are either small and steady (banks at around 1%) or small and declining (insurance companies’ holdings have declined from 6% in the early 1980s to 2% now).
  • The chart below shows how US equity ownership as a % of total has changed between 2008 and 2016.

Source: US Z1 Flow of Funds, Federal Reserve