ICI annual report flags private markets, ETF reform as 2026 priorities

The Investment Company Institute, the Washington, D.C.-based trade group representing more than $60 trillion in fund assets, has published its 2026 Annual Report, making clear where the industry's lobbying firepower has been directed.

The report, released October 12, covers a fiscal year the organization's president and chief executive officer, Eric J. Pan, describes as one of the most productive in its modern history with a focus on opening 401(k) plans to private markets and accelerating a structural overhaul of how funds reach investors.

According to the report, the Securities and Exchange Commission acted on nine separate ICI recommendations during the year which is a pace of regulatory responsiveness the group says has not been seen since the SEC first implemented the Investment Company Act of 1940.

Private markets in 401(k) plans: the signature push

The centerpiece of ICI's 2026 advocacy was retirement. In March 2026, the Department of Labor proposed a framework that would give 401(k) plan fiduciaries a process-based safe harbor for considering a broader range of investments - including private equity, real estate, infrastructure, and private credit - without fear of second-guessing or litigation.

The proposal reflects an approach ICI had long championed: that what matters under the Employee Retirement Income Security Act is whether a plan fiduciary follows a sound decision-making process, not which asset class is being considered. The DOL's draft rule adopted the asset-neutral framework ICI had pressed for, and ICI submitted a comment letter in June 2026 endorsing the direction while recommending targeted refinements.

To support the case, ICI economists modeled the potential impact across 100,000 simulations of a 40-year career. According to the Annual Report, a target date fund with a 20 percent allocation to private assets produced an estimated median account balance 12 percent higher than a public-only portfolio, and accounts with a private asset allocation came out ahead in 94 percent of those simulations. The analysis was filed alongside ICI's formal comment letter to the DOL.

The report draws a pointed comparison with institutional investors: state and local defined benefit pension plans held approximately 23 percent of their assets in private equity and real estate in 2024, up from roughly 8 percent in 2001. The typical 401(k) participant has had no equivalent access - a gap ICI is working to close.

ETF share classes and the SEC's structural concessions

The other major regulatory development covered in the report is the SEC's decision to allow mutual funds and ETFs to operate as share classes within the same portfolio - a structure ICI had advocated for years.

In March 2026, the SEC granted ICI exemptive and no-action relief from various Exchange Act rules and statutory provisions, described in the report as the final regulatory hurdle for ETF share classes. The SEC had begun issuing exemptive relief to individual member firms in November 2025, and ICI has since been working with members, the Depository Trust and Clearing Corporation, and other market participants to build the operational infrastructure needed to bring these products to market.

The report notes that ICI's four webinars on the subject over the past year drew total attendance of nearly 3,000 - a signal of how closely the industry is watching. An ETF share class structure, in which a mutual fund and an ETF operate within the same underlying portfolio, has the potential to deliver economies of scale, tax efficiencies, and broader investor choice simultaneously.

Other wins: e-delivery savings, fund proxy costs, and the INVEST Act

The ICI report also highlights several other regulatory and legislative developments.

On electronic delivery, the SEC proposed making e-delivery the default for shareholder communications. ICI's analysis, cited by the Commission in support of the proposal, found the change could save funds and their shareholders between $589 million and $797 million a year - or $3 billion to $4 billion over five years - while preserving the right to receive paper at no charge. Separately, ICI's own research found that 88 percent of fund investors support making e-delivery the default, provided paper remains an option at no charge.

On fund proxy costs, ICI filed a March 2026 report drawing on data from 62 member firms that found total fund proxy campaign costs between 2020 and 2025 reached as much as $1.1 billion - costs ultimately borne by fund shareholders. ICI is pressing the SEC to reform the proxy system, arguing the current framework was designed for a much smaller fund industry and now imposes unnecessary friction and expense.

The bipartisan INVEST Act, which passed the House of Representatives in December 2025, would allow collective investment trusts - a lower-cost vehicle long available in 401(k) plans - to be offered in 403(b) plans, giving educators, healthcare workers, and nonprofit employees comparable options. The bill now awaits Senate action.

Ownership broadens as industry grows

The report also provides a snapshot of the industry's scale and reach. As of mid-2026, approximately 58.5 percent of U.S. households (about 80.2 million) own funds, with 139.1 million individuals invested in mutual funds, ETFs, or other registered investment companies.

ICI's Fact Book, published in April 2026, documented that ETF net issuance in 2025 reached a record $1.5 trillion and that total ETF net assets surpassed $13 trillion.

The full ICI 2026 Annual Report is available at ici.org.