Transactions on Internet Found to be Flat
December 6, 1999
Access to the Internet is becoming more commonplace, but mutual fund investors with Internet access are not buying and selling funds online in growing numbers, according to a new survey from American Century Investments of Kansas City, Mo.
Internet access has grown from 18 percent in 1996 to 62 percent this year, according to American Century's fourth annual Internet Adoption Study. In the past three years, however, there has been essentially no increase in mutual fund shareholders' use of mutual fund companies' websites to buy and sell funds, according to the study.
In 1999, approximately eight percent of mutual fund investors with access to the Internet said they sell fund shares using fund websites. Approximately six percent buy shares through that medium, according to the study. Both figures have remained fairly constant since American Century began questioning investors on the issue in 1997, according to the report.
Instead of conducting transactions, investors are using the Internet to check share prices, review account balances, download prospectuses and perform other tasks, according to the study.
American Century hired the marketing research firm of Elrick & Lavidge of Atlanta, Ga. to conduct the survey. Elrick & Lavidge conducted telephone interviews of 251 investors this fall who own mutual funds outside of an employer-sponsored retirement plan and who have access to the Internet.
The largely unchanged percentage of fund investors conducting transactions may be attributable to the nature of mutual fund investors, said Chris Doyle, an American Century spokesperson. Fund investors are more inclined to buy and hold their investments than to trade frequently, he said.
There are some factors in the study suggesting that over time, the number of shareholders conducting transactions may increase, Doyle said. The survey found that the percentage of investors concerned about security and privacy issues has decreased from 68 percent in 1996 to 37 percent this year. At the same time, those investors with no concern about security or reliability issues on the Internet have increased from 15 percent to 38 percent.
Banking and online purchasing have increased significantly since 1996. Twenty-one percent of investors reported doing banking online in 1999, up from eight percent in 1996. Online purchasing among investors has risen from 18 percent to 54 percent during the same period.
The combination of increased confidence in the Internet and the growing use of the medium for personal financial transactions suggests that the number of shareholders who buy and sell funds online will increase, Doyle said.
The study also shows that participants in 401(k) plans are not increasing their use of the Internet to get access to plan information. Only 38 percent of those investors who have access to their 401(k) information online have used that service, according to the study. That figure is down from approximately 43 percent in 1997, the report said.