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Which Financial Assets Do Americans Own?

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Which Financial Assets Do Americans Own?

Financial Assets

Which Financial Assets Do Americans Own?

Like ingredients in a recipe, there are many different assets that can be combined to form household wealth. One subgroup is financial assets, which are non-physical assets such as bank deposits or stocks. However, some financial assets are much more common than others.

In this Markets in a Minute chart from New York Life Investments, we look at the percentage of families who own each type of financial asset.

Types of Financial Assets by Popularity

The U.S. Federal Reserve surveyed over 128 million families on their finances, including one-person households. Here is the percentage of families that hold each type of financial asset, along with the median and average values held.

The large differences between median and average values are due to some upper income households owning a highly disproportionate share of financial assets.

 Percent holdingMedian valueAverage value
Transaction accounts98.2%$5,300$41,700
Retirement accounts50.5%$65,000$255,200
Cash value life insurance19.0%$9,000$41,000
Directly-owned stocks15.2%$25,000$348,500
Pooled investment funds9.0%$110,000$854,300
Certificates of deposit7.7%$25,000$102,000
Savings bonds7.5%$800$8,500
Other7.4%$4,000$73,800
Other managed assets5.9%$115,000$512,200
Directly-owned bonds1.1%$121,000$653,600

Note: Data as of 2019. Other managed assets include personal annuities, trusts with an equity interest, and managed investment accounts. Other assets include oil and gas leases, futures contracts, royalties, proceeds from lawsuits or estates in settlement, and loans made to others. Employment-related stock options are excluded due to the uncertainty of their value until the exercise date.

Transaction accounts—such as checking, savings, and money market accounts—are owned by almost all Americans. In addition, the median value of transaction accounts rose 11% from 2016 to 2019, suggesting that Americans are holding more cash.

The second most common financial asset is retirement accounts, which includes individual accounts, Keogh accounts for self-employed people, and certain employer-sponsored accounts. Retirement accounts can hold almost any asset type, such as stocks, bonds, pooled investment funds, options, and real estate.

Only 15% of families hold directly-owned stocks. This excludes indirect holdings in pooled investment funds, retirement accounts, and other managed assets. When indirect holdings are included, the proportion of American households owning stock rises to 53%.

Stock Ownership Over Time

How has stock ownership changed compared to previous years? Over the last three decades, the percentage of families owning directly and indirectly held stocks has increased by over 20%.

U.S. Stock Ownership Over Time

Stock ownership declined slightly after the 2001 dotcom bubble burst and the 2008 global financial crisis. It’s likely that some investors fell victim to emotion and sold at a loss when stocks dropped. After initial reluctance to re-enter the market, ownership climbed in both cases. However, it has not yet exceeded its 2007 peak.

Notably, while more upper income households own stock, their ownership levels declined slightly from 2016 to 2019. Over the same timeframe, families in the bottom half of the income distribution saw a rise in stock ownership.

Diversifying Potential Sources of Wealth

Almost all families own transaction accounts, but fewer families own other financial assets such as bonds, stocks, and retirement accounts.

In order to diversify their portfolios and maximize their wealth-building potential, families may want to consider broadening the account types and asset classes that they own.

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Markets in a Minute

Data Centers: Investing in the Infrastructure of the Future

Infrastructure refers to any asset that provides an essential service. In today’s interconnected world, data centers are exactly that.

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Data Centers

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Data Centers: Investing in the Infrastructure of the Future

Digital transformation is one of the world’s most prominent trends today.

For evidence, consider the growth in internet users worldwide. By 2023, 5.3 billion people (66% of population) will be using the internet, up from 3.9 billion (51% of population) in 2018.

This growth has resulted in an incredible amount of data being produced each day, whether its from streaming music on Spotify or buying goods on Amazon. But how is all this data being processed?

In this Markets in a Minute chart from New York Life Investments, we shed light on the importance of data centers, and why they should be considered as core infrastructure.

The Role of the Data Center

A data center is a facility that stores, processes, and disseminates data. There are thousands of them around the world, and collectively, they’re referred to as the “cloud”.

This puts data centers at the center of nearly everything we do online: e-commerce, communications, storage and back-up, and even online gaming. To gain a better sense of what this all looks like, the following table breaks down the storage capacity of the world’s data centers.

Segment2016 Storage Capacity (exabytes)2021 Storage Capacity (exabytes) 
Compute160470
Collaboration170400
Database & analytics150380
Enterprise resource planning180420
Video streaming50180
Social networking60160
Search engine30100
Other consumer apps70190
Total8702,300

Source: Statista (2021)

One exabyte is equal to one billion gigabytes, which means the world currently has 2.3 trillion gigabytes of total storage.

The largest segment is compute instances, which are cloud-based workstations used by data scientists. At the lower end of the scale are segments like video streaming (includes Netflix and Hulu) and social networking (think Facebook or LinkedIn).

Cloud Spending Reaches a Historic Milestone

For businesses that create and use data, moving to the cloud (as opposed to maintaining their own servers) has plenty of advantages like cost savings, flexibility, and security.

This is driving exponential growth in cloud infrastructure spending, which reached a record $130 billion in 2020. At the same time, spending on data center hardware decreased from $96 to $90 billion. These results are partly attributed to COVID-19, which forced many businesses to switch to a work-from-home operating model.

A survey conducted by 451 Research found that 40% of businesses had increased their usage of cloud services during the pandemic. In addition, 85% of those who were impacted indicated that the move would be a permanent one.

Data Centers are Infrastrcture

The scope of an infrastructure investor has historically been limited to companies in construction, energy, and transportation.

But what defines infrastructure?

It’s any physical system that is vital for an economy’s development and prosperity—and in a world where over 5 billion people are expected to be online by 2023, the data center is the perfect embodiment of that.

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Sustainable Investing Assets Worldwide (2018-2020)

From 2018-2020, global sustainable investing assets grew by 15% to reach $35.3 trillion. Here’s how they break down across five major markets.

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Sustainable Investing

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Sustainable Investing Assets Worldwide (2018-2020)

Sustainable investing is top-of-mind for many investors, but how fast is it actually growing?

Between 2018 and 2020, global sustainable investing assets grew 15% to reach $35.3 trillion. This works out to more than a third of total assets under management.

In this Markets in a Minute from New York Life Investments, we explore the value and growth of sustainable investing assets across five major markets.

What is Sustainable Investing?

Sustainable investing considers environmental, social, and governance (ESG) factors in portfolio selection and management. For the purposes of this data, it is a broad definition that includes seven main approaches:

  • ESG integration
  • Corporate engagement & shareholder action
  • Norms-based screening
  • Negative/exclusionary screening
  • Best-in-class/positive screening
  • Sustainability themed/thematic investing
  • Impact and community investing

In most regions, it is becoming increasingly common to combine several of the above strategies within the same product.

Sustainable Investing Assets by Region

Sustainable investment data comes from five major markets: the U.S., Europe, Japan, Canada, and Australasia. Currencies have been converted to U.S. dollars at the prevailing exchange rate at the day of reporting. We’ve based growth rates on U.S. dollar values.

Here is the value of sustainable investing assets in U.S dollars, sorted by asset amounts in 2020.

Region20182020Growth Rate
United States$12.0T$17.1T42%
Europe$14.1T$12.0T-15%
Japan$2.2T$2.9T32%
Canada$1.7T$2.4T43%
Australasia$734B$906B23%

All 2020 assets are reported as of December 31, 2019 except for Japan which reports as of March 31, 2020. Australasia is Australia and New Zealand. In 2020, Europe includes: Austria, Belgium, Bulgaria, Denmark, France, Germany, Greece, Italy, Spain, Netherlands, Poland, Portugal, Slovenia, Sweden, the UK, Norway, Switzerland, and Liechtenstein.

The U.S. makes up almost half of global sustainable investment assets, and saw the second highest growth rate. One strong theme in the country is racial justice investing. Over 120 investors and organizations signed a call to action for the investment community to dismantle systemic racism and promote racial equity and justice. They plan to achieve this through various actions, such as hiring people of color and financing Black entrepreneurs.

Europe makes up over a third of all sustainable investing assets. The region has seen important regulatory developments, such as:

  • Institutional investors, asset managers, and advisors must report on how they integrate sustainability risks and adverse impacts at the entity level
  • Advisors are required to ask about their clients’ ESG preferences and advise appropriate products

While Europe saw a decline in growth from 2018-2020, this is because the region has changed how they define sustainable investing. Tighter legislation means that some products that previously qualified as sustainable may not meet the new requirements. The goal of the legislation is to create clear standards for sustainable products, promoting trust and easier access for investors.

The Mounting Pressure

Globally, the proportion of sustainable investing assets is growing. In fact, sustainable investments make up 36% of global assets under management, up from 28% in 2016.

Investment professionals say the top drivers of sustainable investing are to help manage investment risks, and because clients demand it. Not only that, the recent Intergovernmental Panel on Climate Change (IPCC) report has reinforced the importance of sustainable investments.

“The climate crisis poses enormous financial risk to investment managers, asset owners and businesses….. The public and private sector must work together to ensure a just and rapid transformation to a net-zero global economy.”
António Guterres, UN Secretary-General

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