Investment Company Institute (ICI): Definition, Functions, and Industry Impact

The Investment Company Institute (ICI) functions as the trade association representing regulated fund companies. Based in Washington, D.C., ICI extends its services to both U.S.-based funds and similar offerings available to investors worldwide. Membership in ICI is open to investment companies registered with the Securities and Exchange Commission (SEC), which includes mutual funds, closed-end funds, exchange traded funds (ETFs), and unit investment trusts.

ICI’s core mission encompasses three primary objectives: promoting public comprehension of mutual funds and other investment companies, advocating for adherence to high ethical standards within the industry, and advancing the interests of investment funds and their stakeholders.

As of 2020, ICI fund members managed a substantial $34.5 trillion in assets in the U.S., catering to over 100 million shareholders, along with $8.3 trillion in other jurisdictions. The international arm of ICI, known as ICI Global, serves non-U.S. jurisdictions with offices in London, Hong Kong, and Washington D.C.

The Investment Company Institute (ICI) traces its origins back to the New Deal era, established as the agency responsible for administering the Investment Company Act of 1940. Initially known as the National Committee of Investment Companies in New York, the organization underwent a name change to the National Association of Investment Companies (NAIC) in 1941. Subsequently, in 1961, it adopted the name by which it is known today: the Investment Company Institute.

At its inception, ICI boasted 68 mutual funds and 43 closed-end funds among its members, with total industry assets amounting to $2.1 billion. Over the years, ICI expanded its initiatives, introducing its first public information program in 1943 and publishing its inaugural statistical summary in 1958, which later evolved into the annual ICI Investment Company Fact Book report.

In 1959, ICI convened its inaugural general membership meeting, coinciding with the organization’s name change in 1961. This period also marked the expansion of membership to underwriters and advisors of mutual funds. By 1970, ICI had relocated its headquarters from New York to Washington, D.C.

The Investment Company Institute (ICI) directs its efforts across three primary program areas: public policy issues, public communications, and research. Through advocacy initiatives, ICI supports legislative and regulatory measures conducive to its members’ interests. It represents its members before governmental bodies such as Congress, the SEC, and foreign regulators, advocating for policies that benefit the investment fund industry.

Under its public communications program, ICI disseminates a diverse range of information to the media, including news releases, industry background, testimonies before legislative and regulatory bodies, and conference speeches, covering industry perspectives and regulatory proposals.

As part of its research program, ICI furnishes comprehensive data and analysis pertaining to the fund and retirement markets, encompassing statistics, demographics, emerging trends, and fee structures.

Established in 1989, the ICI Education Foundation (ICIEF) serves as the educational arm of ICI. In collaboration with government agencies and regulatory bodies, ICIEF develops, offers, and promotes investment education programs targeting diverse audiences. Additionally, ICIEF endeavors to foster nationwide savings and investing through educational coalitions, conferences, and initiatives.

The Securities and Exchange Commission (SEC) identifies three main types of investment companies: mutual funds (open-end companies), closed-end funds (closed-end companies), and unit investment trusts (UITs).

As of 2019, there were 16,660 investment companies in the United States, representing a decrease from the previous year’s count of 17,090.

The appropriate contribution level for a 401(k) plan varies based on individual circumstances such as age, financial situation, obligations, and income. While there’s no one-size-fits-all answer, financial experts often recommend contributing between 15% to 20% of gross income to a retirement plan for optimal long-term financial security.