What You Should Know About the Investment Company Institute (ICI)
What Is the ICI and What Do They Do for Investors?
The Investment Company Institute (ICI) is an association of U.S. investment companies, including mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UIT), all of which are collectively called funds. The ICI's mission is to encourage high ethical standards, promote understanding of mutual funds to the public, and to advance the interests of funds and fund companies.
The ICI came into existence as a result of the Investment Act of 1940, which was passed by Congress in response the stock market crash of 1929 and subsequent Great Depression. Part of the 1940 Act was to establish the responsibilities of investment committees, with the underlying purpose of preventing another crash and devastating recession. The 1940 Act created the National Committee of Investment Companies, which would become today's ICI.
What the ICI Does and How They Can Benefit Investors
The ICI can be a valuable source of information for investors, investment advisers, and investment companies. Some of the information includes research and statistics, news and events, education, and frequently asked questions. In summary, the Investment Company Institute is rich source of information and education for fund shareholders, investment advisers, money managers, and investment companies.
Here are some of the primary ICI resources investors can use for their benefit:
- Research and Reports: Whether you're an investor looking for information on investing in mutual funds or an investment writer looking for research reports to support an article you are writing, the ICI's Industry Research page can be a good place to start.
- Investor Research: If you're looking for trends on investor behavior toward funds, such as trading trends, or what types of mutual funds and ETFs investors are buying and holding now, the most recent Investment Company Fact Book is a valuable resource.
- Publications and Resources: If you're looking for the latest white papers, industry reports or frequently asked questions on mutual funds, ETFs, closed-end funds, and more, you'll have quick access to almost any piece of information you need.
There are many other resources and tools available through ICI, most of which are on their website at www.ICI.org. And if you're not quite sure what you need or where to find it, the ICI site has a search tool to help you find the right information that can help you.
How to Use the ICI 'Fund Flows' Report
Fund flow is a term used to describe the purchases (inflows) and redemptions (outflows) of funds on the part of investors. Investors and money managers watch fund flows to measure trends and investor sentiment toward a particular asset class (stocks, bonds or cash), fund style (growth or value) of type of fund, such as U.S. stocks, international stocks, large-cap stocks, small-cap stocks, and so on.
For example, if inflows are high, or above-average, this could indicate positive investor sentiment. Or, in an extreme case, when inflows are at all-time record highs, a contrarian investor may detect this as a sign the market may be at a high and ready to enter into a major correction. The opposite is true: above-average outflows indicates negative investor sentiment and record outflows may point to a market low, indicating a good time to buy shares.
Final Word on Using ICI as a Resource
The ICI has an interest in promoting the use of investment funds; therefore, they have a bias toward the public use of mutual funds, ETFs, closed-end funds, and UITs. However, the ICI is not an investment company and does not sell investment products. Therefore, investors, investment advisers, and members of the media trust that the information available at ICI is factual and reliable information.
As with any kind of investment activity, researching mutual funds and other investment funds should consist of using several different tools before making a final decision to invest in a particular fund. The timeless attributes of diversification, dollar-cost averaging, and long-term strategies should lead investor decisions. The ICI would agree with this statement.
Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.