Press Releases

The House Financial Services Subcommittee on Capital Markets, led by Subcommittee Chairman Ann Wagner (MO-02), held a hearing to examine the modern investment ecosystem and assess the investment strategies available to Americans.

On Expanding Investment Opportunities for Americans:

Full Committee Chairman French Hill (AR-02) said, “Last year, retail flows in the stock market, [saw a] 53% increase from 2024. Passive investing and index investing have grown significantly, with the number of ETFs having surged. This growth means individual investors have more options than ever to tailor a financial strategy to their exact timeline and risk tolerance. And that's a good thing. And this hearing is really going to explore the impact of that in the mix of active and passive investment strategies and how they both contribute to our markets.”

Subcommittee Chairman Wagner said, "Whether saving for a child’s tuition, a first home, or retirement, Americans deserve investment opportunities that fit their unique circumstances and provide steady, long-term returns. We’re not here today to pick winners and losers. Our goal is to understand what these trends mean for retail investors and retirement savers.”

Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Chairman Frank Lucas (OK-03) asked Mr. Tom Quaadman, Chief of Government Affairs and Public Policy at the Investment Company Institute, about the importance of the INVEST Act being signed into law, to which he replied, "The INVEST Act has, you know, several different components to it, but one, obviously, it deals with a lot of the issues that will allow for growing public capital markets. But more importantly, it also provides for different investor opportunities as well.”

On Continuing to Strengthen America’s Capital Markets:

Subcommittee on National Security, Illicit Finance, and International Financial Institutions Chairman Warren Davidson (OH-08) said, “Healthy capital markets depend on competition, transparency, and accurate price signals. We want retirement savers to have access to low-cost investment options, but we also want markets that continue to allocate capital efficiently, support innovation, [and] provide opportunities for the next generation of Americans and American companies.”

Homeland Security Chairman Andrew Garbarino (NY-11) said, “The United States remains the world's leading destination for investment, supported by deep and liquid capital markets, strong investor protections, transparent disclosures, and a long history of innovation and capital formation. Those strengths have helped American businesses access capital, fuel economic growth, and create investment opportunities for millions of retirement savers and individual investors.”

On Potential Risks to Investment Opportunities:

Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence Chairman Bryan Steil (WI-01) asked about market development stemming from the SEC’s 2019 ETF Rule (Rule 6c-11), to which Ms. Jody Jonsson, Vice Chair, Capital Group, replied, “I think the rule change leveled the playing field between active and passive ETFs. I think up to that point, ETFs had been synonymous with passive and basically passive was the only way to get exposure to the vehicle which was, in some cases, much more attractive for the investor. Now that you have an active ETF market as well, active ETFs are actually taking share from passives and growing much faster, which to us suggests that it isn’t passive that was so attractive it was the vehicle that was attractive.”

Rep. Troy Downing (MT-02) asked the witnesses to compare the costs of active and passive funds, to which Mr. Jeffrey Ptak, Managing Director, Morningstar, replied, “Yes, indeed, we have seen the cost of active funds come down. That's for a few reasons. One is, so if you're looking at something like an asset-weighted average expense ratio for active funds, I think as of the end of last year, it was 0.57%. I think that's about 30 basis points or so lower than it was ten years ago. And that's the product of two things. Fund managers have been lowering their fees, and investors have been responding by directing monies towards cheaper active funds. And so that's brought that asset-weighted average expense ratio lower.”

Witnesses Echoed the Work of the Committee:

Ms. Jonsson said, “Active management is critical to capital formation, providing a long-term stable source of capital across market caps, market conditions, industries, and geographies. This is particularly important for small- and mid-size companies that are a vital engine for the U.S. economy, jobs, and innovation.”

Dr. Matthew Ringgenberg, Emma Eccles Jones Professor of Finance, David Eccles School of Business, University of Utah, said, “The United States has the deepest, most liquid, and most innovative capital markets in the world, and this has been a fundamental source of American economic strength. But capital markets are an ecosystem. Their health depends on the coordinated, competitive functioning of many different types of participants: active investors who discover prices, passive investors who provide low-cost access to market returns, institutional investors who monitor corporate managers, and retail investors who provide liquidity and participate in economic growth. The structural changes of the past three decades have conferred enormous benefits on ordinary American investors by reducing costs and expanding access.”

Mr. Ptak said, “The evidence suggests that over the past two decades, a combination of rising standards, market competition, growing investor cost-consciousness, and sound regulatory stewardship has contributed to outcomes for ordinary Americans that would have seemed remarkable not long ago. Morningstar’s research documents three dimensions of that progress: a dramatic reduction in what investors pay, a decisive shift toward more cost-efficient investment vehicles, and evidence that investors are capturing more of the market's returns than ever before.”

Mr. Quaadman said, “ICI strongly supports H.R. 3383, the Incentivizing New Ventures and Economic Strength Through Capital Formation (INVEST) Act of 2025. The INVEST Act, a bipartisan package of legislative reforms passed by this Committee and on the floor of the U.S. House of Representatives with strong bipartisan support, would help protect and strengthen Americans’ ability to invest and secure their financial futures. It should be noted that the INVEST Act has strong bipartisan support as witnessed by its passage through a vote of 302-123 last December.”

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