ICI Quarterly Update, January 2026

As the United States approaches its 250th anniversary, the milestone offers an opportunity to reflect on the institutions and ideas that have shaped the nation’s economic success. ICI is proud to be a supporting partner of America250—a nonpartisan initiative commemorating the 250th anniversary of the United States—as part of its own efforts to mark this historic moment and highlight the role regulated funds play in supporting investors, communities, and the broader US economy.

For millions of Americans, regulated funds are essential tools for pursuing the milestones that define the American dream. Households rely on them to save for a first home, pay for education, and build long-term retirement security through diversified, professionally managed investments. With more than half of US households owning regulated funds, these vehicles remain one of the most effective ways for working families to participate in capital markets.

Beyond individual investors, regulated funds provide critical support to communities across the country. By investing in municipal securities and other public finance instruments, funds help states and local governments finance schools, hospitals, transportation networks, and other infrastructure.

Regulated funds also play a central role in driving economic growth. They provide reliable capital to businesses of all sizes, including innovative private companies that are shaping the future of the economy. 

Together, these contributions underscore why regulated funds remain essential to a strong economy—and why policy reforms that strengthen this framework matter for investors and the country alike.

The INVEST Act Advances in Congress

In December, the House passed the INVEST Act, a bipartisan measure to strengthen investment opportunities and support long-term capital formation. The bill advances a set of targeted reforms affecting how regulated funds operate and communicate with investors.

The INVEST Act includes provisions to strengthen closed-end funds by limiting the ability of activist investors to pursue short-term strategies that can come at the expense of long-term shareholders. It also codifies recent SEC actions that make it easier for regulated funds, including closed-end funds and business development companies, to invest in private funds and private companies—helping extend these investment opportunities to everyday investors.

In addition, the legislation promotes more efficient and modern investor communications by supporting the use of electronic delivery as the default option for shareholder materials. The bill also takes an important step toward retirement-plan parity by allowing collective investment trusts (CITs) to be offered in 403(b) plans, giving millions of educators, healthcare workers, and nonprofit employees access to the same cost-efficient investment options long available to 401(k) participants. Together, these reforms are intended to reduce unnecessary costs, improve access to information, and support a more inclusive investment framework for long-term investors.

The Need for Cross-Trading Reform

According to ICI’s estimates, in 2020, fixed-income cross-trading saved funds and their investors nearly $330 million. Following that year, the SEC disrupted the framework by which funds cross-trade, resulting in increased costs and a less efficient regulatory approach. However, the SEC has recently signaled an openness to revise the rule on cross-trading. In a recent ICI Viewpoints blog post, ICI laid out five elements that we believe the SEC should focus on to restore the benefits of cross-trading while not compromising strong investor protections. ICI stands ready to work closely with the SEC to achieve those goals.

The Cost Savings of E-Delivery

ICI shared with the SEC new estimates on the potential annual savings of electronic delivery, ranging from $589 million to $797 million per year for funds and their shareholders, with projected cumulative savings of $3 billion to $4 billion over five years. ICI data also found that fund investors overwhelmingly prefer to receive electronic delivery and support e-delivery, with 88% of fund investors agreeing that “as long as people can still request paper at no cost, it’s a good idea to make e-delivery the default.”

Strengthening Trump Accounts

ICI has been engaging with the Treasury Department and the IRS to encourage them to protect competition in how they administer Trump Accounts, the new tax-deferred savings tool created under the One Big Beautiful Bill to give children born between 2025 and 2028 a head start on investing. Treasury’s implementation decisions will determine whether families have genuine choice in how they save for their children’s future. To demonstrate ICI’s confidence in the long-term success of these accounts, ICI recently announced a $1,000 matching contribution for Trump Accounts for employees’ children. 

Important Considerations for FSOC Reform

Congress is continuing to examine bipartisan legislation to improve the nation’s financial stability framework by strengthening the process used by the Financial Stability Oversight Council (FSOC) to designate nonbank financial companies as systemically important. This legislation would add an important procedural safeguard to FSOC’s most consequential authority. These reforms matter for fund investors.

State-Level Advocacy 

In conversations with state attorneys general, governors, senior executive-branch officials, and key state legislators during policy convenings and one-on-one discussions, we elevated ICI’s perspective on fiduciary standards, capital-markets issues, and investor outcomes, while strengthening relationships in priority states ahead of the 2026 legislative cycle.

ICI worked with the California Air Resources Board (CARB) as it developed guidance for the implementation of climate disclosure laws SB 253 and SB 261. Through sustained engagement with agency staff and external partners, ICI helped ensure mutual funds and other regulated funds were not treated as “covered entities” under CARB’s emerging disclosure framework—avoiding significant compliance challenges and misalignment with federal reporting regimes.

Across Florida, Maine, and California, ICI continued targeted outreach to state officials on unclaimed property reforms affecting securities accounts, reinforcing the risks of premature escheatment for investors. We encourage balanced policy approaches that prioritize investor protection and operational workability for firms and account holders.

Global Regulatory Affairs

Globally, ICI continued to advance a coordinated regulatory agenda focused on expanding retail participation, supporting market integration, and promoting regulatory frameworks that enable innovation while maintaining strong investor protections.

European Union 

Market Integration and Supervision 

In December, the European Commission proposed the Market Integration and Supervision Package, incorporating several ICI Action Plan recommendations such as aligning UCITS and AIFMD marketing rules and reducing gold-plating to enable cross-border activity. While the package represents progress, ICI continues to call for a credible mechanism to drive supervisory convergence without weakening national supervisory links. 

Retail Investment Strategy (RIS) 

ICI welcomed the recent development to drop rigid UCITS cost and performance benchmarks and support default e-delivery of disclosures, which are both positive steps for retail investors. However, the RIS remains overly complex, falling short of the structural reforms needed to promote long-term retail participation. ICI will remain engaged with EU policymakers and national authorities as negotiations on the final legislative text continue. 

Securitisation Regulation 

As the EU revisits its Securitisation Regulation, ICI is advocating for an investor-focused approach that revitalizes Europe’s securitisation market. Key priorities include streamlining regulation and restoring market confidence to support capital markets growth. 

United Kingdom 

Fund Tokenization 

ICI responded to the FCA’s consultation on fund tokenization, supporting its phased, collaborative model, particularly “Model 1,” while urging technological neutrality and global alignment to avoid fragmentation and support cross-border scalability. 

Senior Managers & Certification Regime (SM&CR) 

In its submission to HM Treasury, ICI supported the regime’s objectives but called for targeted changes clarifying the scope for overseas managers, reducing duplication for dual-regulated firms, and better aligning with global frameworks. 

Asia-Pacific 

Japan – NISA Reform 

In December, the Japanese government proposed reforms to the Nippon Individual Savings Account (NISA) program aligned with ICI advocacy, including expanded eligibility for minors and broader fund access. The reforms aim to deepen household engagement with capital markets and are expected to be reviewed by the Diet in Q1 2026. 

Hong Kong – Regulator Dialogue 

ICI facilitated senior-level engagement between members and Hong Kong regulators, including policy discussions with the CEO of the Securities and Futures Commission and the Deputy CEO of the Hong Kong Monetary Authority. Topics included regulatory modernization, digital innovation, and liquidity risk management, reinforcing ICI’s standing as a trusted voice in the region. 

Singapore – Long-Term Investment Fund (LIF) 

ICI continues to engage the Monetary Authority of Singapore on its proposed LIF framework. ICI has stressed the need for proportionate requirements, operational clarity, and design features that support global sponsors and broaden retail access to private markets. 

Navigating ETF as a Share Class

ICI’s push for ETF share class relief reflected a sustained, strategic effort that culminated in the SEC issuing an order on ETF share class applications. After numerous asset managers filed exemptive applications, ICI convened an ETF share class working group in 2024 to educate members on the relevant issues and develop strategies for moving relief forward.

Additionally, ICI published a white paper, ETF Share Class Operational Considerations, laying out practical considerations for asset managers evaluating and implementing the dual share class structures. The white paper was complemented by a webinar series exploring ETF developments and potential missteps when bringing a product to market, including operational, asset management, and intermediary considerations. 

Promoting Greater Access to Investing and Driving Better Retirement Outcomes

Expanding Access to Investment Options

ICI has been a leader in advocating for policy changes that recognize the built-in protections provided by funds subject to the Investment Company Act of 1940 ('40 Act) as a way to expand retail investor access to private markets. ICI examined how best to implement President Trump’s executive order democratizing access to alternative assets for 401(k) investors and identified the remaining hurdles to facilitating greater private markets access for retail investors. Our work has centered on one such challenge, promoting greater retail investor education on private markets, to lay the groundwork so that individual investors can better take advantage of the opportunities afforded by this asset class.

More People Are Investing

We also published survey research showing how regulated funds have democratized investing in the US. ICI economists wrote in a recent Viewpoints blog that regulated funds have broadened participation in American capital markets, with the number of households owning regulated funds increasing from 50.6 million to 76 million over the past two decades. The ICI survey highlighted how this growth is most pronounced among middle- and lower-income households, where fund ownership has risen significantly.

Staying the Course

ICI economists examined the behaviors that contribute to 401(k) participants’ wealth-building success. Chief among these behaviors is a steady, long-term perspective and a propensity to continue making regular contributions through market ups and downs. ICI research finds that defined contribution (DC) plan participants appreciate the features of their plans and tend to stay the course.

Figure 1
Changes in 401(k) Plan Account Balances Among Consistent 401(k) Participants
Average 401(k) plan account balance and percent change compound annual average growth rate, 2019–2023

Note: The sample is 2.7 million consistent participants in the EBRI/ICI 401(k) database over the four-year period from year-end 2019 to year-end 2023. Age group is based on participant age at year-end 2023. Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan loans. Retirement savings held in plans at previous employers or rolled over into IRAs are not included.

Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project

Cybersecurity Resiliency for Members and Investors

ICI released the 2025 ICI Operational Resiliency Tabletop Exercise After-Action Report, summarizing key takeaways from a three-day, member-led simulation designed to strengthen preparedness for major operational disruptions. The exercise convened more than 40 member firms to test response strategies for a simulated outage at a critical service provider, reflecting the growing risk posed by fourth-party dependencies in an interconnected financial system.

Participants identified gaps in resiliency planning, evaluated cross-functional coordination, and benchmarked their approaches against peers. By convening firms of all sizes in a trusted setting, ICI facilitated practical insights and information sharing to help members strengthen operational resilience and protect fund investors.