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Insights on the U.S. InvestorInvesting trends are changing. Is the industry prepared for what’s next?Photo

TABLE OF CONTENTSThe last few years have been a wild ride for the markets,capped by COVID-19’s arrival in the first half of 2020.MEET THE MOMENTThis Broadridge study provides unprecedented, evidence-based insight into how U.S. investorspurchase equities, mutual funds and ETFs through financial intermediaries. It presents trenddata into how investor assets have been allocated across generations, channels and investmentproducts from 2017 through the first six months of 2020.This study explores: The impact of the pandemic The rise of lower-cost investment products Shifts in channel usage The influence of Millennials Growth of the Mass Market2 BROADRIDGEBROAD MARKET OBSERVATIONS3SHIFTS IN INVESTMENT CHOICES7THE BURGEONINGMILLENNIAL MARKET10MONEY IN MOTION13METHODOLOGY14GLOSSARY15ABOUT THE STUDYDrawing on de-identified data from theroughly one-third of U.S. households thatinvest in mutual funds, equities and exchangetraded funds (ETFs) sold through financialintermediaries, this study delivers a unique,evidence-based view of investor holdings.Our data scientists: E xtracted from a dataset spanning tensof millions of investor households andbillions of data points U tilized a sample of 20,000 householdsto explore investor demographics, intermediarychannels and investment products I ncluded data for 2017, 2018, 2019,and the first half of 2020.See Methodology for more detail.

BROAD MARKET OBSERVATIONSHousehold investment levels mirror the movement of the marketsAs the markets have fluctuated, investor assets under management (AUM), defined for thepurposes of this study as invested assets in mutual funds, ETFs and equity securities purchasedthrough financial intermediaries, have moved as well.Market performanceMedian household AUM(% change from prior year, S&P 500 Total Return*)n 2017 n 2018 n 2019 n YTD 6/2020(Median AUM in 1,000s)n 2017 n 2018 n 2019 n YTD 6/2020 31.5% 66 59 56 21.9%-4.4% 51-3.1%*Source: Refinitiv LipperYet, some generational segments have fared better than others. The Boomer and Silentgenerations were at or above their pre-COVID AUM levels by end of June 2020.MillennialBorn 1981-1996Median household AUM by generation(Median AUM in 1,000s)n 2017 n 2018 n 2019 n YTD 6/2020 88 88 94 105 106 86 66 67 26 26 6Gen XGen XBorn 1965-1980Baby BoomerBorn 1946-1964Silent GenerationBorn 1928-1945 38 35 7 12 11MillennialTHE GENERATIONSBoomerSilentTOC BROADRIDGE 3

BROAD MARKET OBSERVATIONSEducational attainment mattersLevel of education is consistently a strong indicator of AUM.In addition, investors with higherlevels of education are more likelyto own more than one typeof investment product.AUM by education level(Median AUM in 1,000s) 109n 2017n 2018n 2019n YTD 6/2020 96 79 63 50 30 37 29Completed high school4 BROADRIDGE TOC 81Investors with multiple types of investmentproducts by level of education(Mutual Funds, ETFs and/or Equities)n High schooln Collegen Graduate school 59 47 32Completed collegeCompleted graduate school38%45%52%

BROAD MARKET OBSERVATIONSThe influence of the Mass Market is on the riseThe Mass Market represents a growing share of investor households.57% 59%Share of households(% in each wealth group)n 2017n 2018n 2019n YTD 6/202052% 51%37% 38%30% 27%13% 14% 11% 11%Mass MarketMass AffluentHigh Net WorthIt also accounts for a growing share of asset ownership.Share of asset ownership51% 50% 53% 50%(% total owned byeach wealth group)n 2017n 2018n 2019n YTD 6/202042% 43%7%7%37% 40%THE WEALTHSEGMENTS10% 10%Mass MarketMass AffluentHigh Net WorthMass Market 100Kin investible assetsMass Affluent 100K– 1MMin investible assetsHigh Net Worth 1MM in investible assetsTOC BROADRIDGE 5

BROAD MARKET OBSERVATIONSThe Mass Market: A closer lookNearly four in ten Mass Market households reside in the South,significantly higher compared to Mass Affluent and High NetWorth (HNW).Millennials and Gen X make up more than half of the Mass Market(while being just 35% of Mass Affluent and 27% of HNW).Share of Mass Market households by regionn Northeast19%n Midwestn SouthWest38%MassMarketHouseholdsSouthShare of Mass Market ( 100K) by generation*n West18%25%n MillennialNortheastMidwest5%n Gen Xn BoomerSilent39%MassMarketGenerationsBoomern Silent23%32%MillennialGen X*1% represented by generations not included aboveCompared to higher wealth segments, Mass Market households are more likely tobe served by the Broker-Dealer channel and less likely to be served by the Online,RIA and Wirehouse channels.Share of Mass Markethouseholds usingeach channel**n Broker-Dealern Onlinen RIAn Wirehouse60%20%18%13%** Totals exceed 100% as some investors use multiple channels6 BROADRIDGE TOC

SHIFTS IN INVESTMENT CHOICESLow-cost institutional shares are more broadly usedWhile A-class shares and institutional shares are the most widely held, A-class shares declinedas low-cost institutional shares showed positive growth over the three-and-one-half-year period.Mutual fundshare classes(% of householdsowning)n 2017n 2018n 2019n YTD 6/202044%43%51%42%39%54%39%54%Institutional SharesA-class SharesOnce only available to HNW investors, institutional shares are now gaining prevalence acrossall wealth segments.Institutional shareclasses by wealth(% of householdsin each wealth tier thatown the institutionalshare class of funds)37% 40%47% 47%45%53%57% 56%67%61% 64%52%n 2017n 2018n 2019n YTD 6/2020Mass Market 100K in investibleassetsMass Affluent 100K– 1MM ininvestible assetsHigh Net Worth 1MM in investibleassetsTOC BROADRIDGE 7

SHIFTS IN INVESTMENT CHOICESETFs are gaining groundHousehold ownership of ETFs, another low-cost alternative, is also on a steady rise.% of households owningn 2017 n 2018 n 2019 n YTD 6/202070% 71% 74% 72%53% 56% 50% 53%30% 32%EquitiesMutual FundsETFsCash flow* data shows the tremendous asset flows into ETFs over the past several years.Intermediary-sold flows by investment vehiclen Mutual Fundsn ETFs 393B 198B 222B 222B 66B20172018 107B20196/2020- 167B*In this study, cash flows are defined as net new assets. Source: Broadridge data and analytics8 BROADRIDGE TOC36% 37%- 302B

SHIFTS IN INVESTMENT CHOICES2020 has seen an increase in the use of equitiesIn 2020, equities rose as a percentof AUM as mutual funds declined.The six-month 2020 growth in equity holdings is most evident among Millennials.Equities as a percentage of total AUM by generationn 2017 n 2018 n 2019 n YTD 6/2020Share of asset ownership by product typen Mutual Funds12%12%n Equities n 2018201932%27%32%31% 33%37%28%40%36%30%33%54%YTD 6/2020MillennialBoomerGen XSilentWhile both Millennial men and women increased equity holdings, men showed a bigger shift.Equities as a % of total holdingsn 2019 n YTD 6/2020Millennial Men25%Millennial Women35%20% 25%TOC BROADRIDGE 9

THE BURGEONING MILLENNIAL MARKETMillennials represent a high-growth segmentMillennials represent the newest, fastest-growing share of the investor market. They will continueto drive growth in the Mass Market segment—and eventually higher wealth tiers as they increase inboth numbers and assets for years to come.Share of investors* (% in each generation)n 2017 n 2018n 2019 n YTD 6/202046% 45% 44%43%27%24% 25% 25%9%11% 12%20% 19% 18%14%MillennialGen XBoomer14%Silent*Generations not included above account for 1% of 2017 and 2019 and 2% of YTD 6/2020Share of asset ownership (% total owned in each generation)n 2017 n 2018n 2019 n YTD 6/202051%54%57%54%32%15% 15% 16%2%2% BROADRIDGE24% 22%20%4%3%Millennial1029%Gen X TOCBoomerSilentIT’S BECOMING EASIER TO INVESTZero commission trades, mobile tradingapplications and the ability to acquirefractional shares are making it moreattractive and easier for younger, lowerasset investors to trade securities. This isbolstering Millennials’ ability to participatemore actively in equity investing.

THE BURGEONING MILLENNIAL MARKETThe online channel is gaining groundThere’s been a gradual increase in usage of the online channel.Channel usage as a % of households year over year*n 2017 n 2018n 2019 n YTD 6/202059% 57%55% 55%24% 25%19% 21%18% 21% 20% 22%20% 20% 18% 19%OnlineRIAWirehouseBroker-DealerChannel usage in 2020 varied across each generation. Millennials primarily used the broker-dealerand online channels.Channel usage by generation*n Broker-Dealern Online n RIA n Wirehouse55%54%29%52%26%18%21%12%16%MEDIAN AGE OFINVESTOR48%22% 22% 21%17%22%25%Broker-Dealer58Online56MillennialGen XBoomerSilentRIA59Wirehouse62* Totals exceed 100% as some investors use multiple channelsTOC BROADRIDGE 11

THE BURGEONING MILLENNIAL MARKETGenerational wealth transfer offers an opportunityWirehouses are investing in ways to reach Millennials and the burgeoning Mass Market —actively making acquisitionsand changes to their business models and branding. Wirehouses hold the highest share of HNW investors, a possible edgein the generational wealth transfer—if they connect effectively with heirs.20%HNW households(% of total householdsby channel)n Broker-Dealern Onlinen RIAn Wirehouse10%201712 BROADRIDGE 0176/2020YTD6/2020

MONEY IN MOTIONAn indication of what’s to comeThese unprecedented times hold opportunity for firms and advisors who seize upon them—and trend data offers an indication of things to come. We anticipate: Money will likely continue to flow into to ETFs Lower-cost institutional shares will continue to gain in popularityThis study represents a baseline, derivedfrom a rich dataset we continue to explore.Watch for deeper analyses into key topicsand periodic refreshes highlighting thelatest trends. Millennial and the Mass Market investors will continue to increase their overall share of AUM O nline self-directed platforms will continue to reduce distribution costs and attract investorsby offering convenient, lower-cost, 365/24/7 accessibilityBroadridge is here to help.For more information, contact your Broadridge Account Representative.TOC BROADRIDGE 13

METHODOLOGYThis study is based on an analysis of a20,000-record random sample of shareownership of U.S. retail investors andhouseholds. Information is derivedfrom Broadridge’s proprietary businessprocesses, and has been de-identifiedfor this study’s findings.Broadridge pulled the sample from itsdatabase consisting of tens of millionsof retail investor households and billionsof data points to achieve a unique levelof insight into holdings invested throughfinancial intermediaries (broker-dealers,online, RIAs, wirehouses). Broadridgeanalyzed exchange-traded funds (ETFs),closed-end funds, open-end mutual fundsand U.S. equities held in taxable accountsand IRAs for the years ending 2017, 2018,2019 and the first six months of 2020.14 BROADRIDGE TOC