Who Really Owns U.S. Equities?

One of the most important features of equity markets is linking entrepreneurs to the investors and capital they need to grow their businesses. 

The Federal Reserve’s Z.1 data is commonly used to see “who owns stocks,” but as we show today, because of the way it works, it misses the big picture – by a lot. 

The raw Z.1 data puts households at about 42% of U.S. corporate equity. However, we think the real number is closer to 63%. That 20-percentage-point gap matters, especially when it comes to how issuers think about disclosure, outreach and sources of capital. 

The raw data undersells households by 20 percentage points 

The Z.1 is the gold standard for understanding who owns U.S. stocks in aggregate. But there’s a catch: The household line is a residual. After the Fed accounts for every identifiable institution – mutual funds, ETFs, pension funds, insurance companies, hedge funds – whatever is left gets assigned to households (and non-profits). That means professionally managed money that ultimately belongs to households gets counted elsewhere. 

There are different data sets that let us estimate how Fed Z.1 categories might be reallocated if we consider ultimate owners differently. 

In column 2 below, we layered in data from the U.S. Securities and Exchange Commission (SEC), FactSet, and ICI to trace beneficial ownership back to its source. The result: When you add back the equity households own through intermediaries, the picture changes substantially. 

Chart 1: Households directly own 42% of U.S. equities, but 63% including indirect ownership 

Professionals are managing household assets, too 

We find that U.S. households also own a lot of U.S. stocks indirectly, via: 

• Private and government pensions (8%). 
• Active (6%) and passive (3%) mutual funds. 
• Life insurance (2%). 

Within what the Z.1 calls “Households (direct),” we can also break out: 

• Advised accounts – assets managed by registered investment advisers for: 
• High-net-worth individuals (6%), which are defined as having more than $2.2 million in net worth (excluding primary home), more than $1.1 million with an adviser, or more than $5 million in investments. 
• Non-high-net-worth individuals (3%). 
• Passive ETFs (4%). 
• Active ETFs (1%). 
• Direct share holdings (30%), including REITs. 

So, when an issuer asks, “How much of my company do individual investors own?” The honest answer is probably closer to 63 cents of every dollar — not 42. 

Not all households own the same amount of stock 

Despite the fact that a majority of U.S. households own stocks via 401k (retirement) plans, breaking down the household ownership by wealth reveals another important nuance. Stock ownership is heavily skewed toward the wealthy. 

Data from the Fed shows the top 1% alone own roughly half of all household equity. The next 9% own another substantial slice. The bottom 90% of households, taken together, own a relatively small share of the total – even accounting for retirement accounts. 

Chart 2: The top 1% of households by wealth own half of all household equity 

This is important to Investor Relations teams looking to expand their register of shareholders. It’s wealthier households – essentially the 90th percentile and up – that own the most stock. And those individuals are more likely to be at private banks or assisted by wealth advisors. 

The upshot: Households matter enormously, but the household equity that actually moves markets is concentrated at the top of the wealth distribution – and more likely to be managed (or advised) by professionals. 

Mix has shifted since 2017 for households and pooled retail assets 

Even if the headline household share has been roughly stable (sum of green areas in Chart 4), the composition underneath has not.  

Since 2017, the first year we have SEC data on advised accounts, the biggest winners and losers have been consistent with broader structural trends in markets. 

Within households, the data shows (Chart 3):  

• Wealthier households are gaining ground as both high-net-worth advised accounts and the top decile of direct holders (90th percentile and above) have increased their share. 
• Direct holdings are shifting up the wealth ladder as the Top 0.1% (99.9%+), 99%–99.9% and 90%–99% wealth tiers have all seen share increases, while lower wealth tiers have been roughly flat. 

Looking across the market or “pooled” retail assets (Chart 3): 

• ETFs are the biggest winner (active, passive, and non-household ownership) – consistent with the decade-long shift toward passive and the structural cost advantages of the ETF wrapper. 
• International ownership is up +3.8pp – U.S. equities remain the world’s reserve asset class. 
• Active mutual funds are down 4.9pp – fee compression and passive substitution. 
• Pensions are down 1.4pp – demographic headwinds as defined-benefit plans mature and shrink. 
• “Other” (driven by the same trends in active mutual funds and pension but for non-household ownership) is down 4.7pp. 

Chart 3: Change in equity share by category since 2017 

None of this is surprising, but it confirms what many might have suspected. 

What if we go back even further 

If we go back even further than 2017, we see some of the biggest growth coming from international investors. That’s a trend that has been playing out for decades, likely boosted by the large number of innovative companies that call US home, global customers and revenues many of those companies have, and the strong performance of the U.S. equity market over that time. 

Chart 4: International equity ownership share has grown steadily over time 

Why this is important 

A lot of recent market structure changes are designed to help “retail” investors trade better. But today’s data shows households also own stocks via managed funds and advised accounts, where professionals pick stocks. That makes them important to providing liquidly, price formation, and efficient financing of capital formation in the U.S. 

It’s critical for regulators and companies to realize that, in fact, around 63% of company financing comes from U.S. households, and increasingly, from overseas investors too.  

That’s why it’s important to get markets right for pooled retail, too, as it includes thousands of households with smaller retirement accounts.  

In short, all households should benefit from low trading costs and the growth of the U.S. equity market.