Felix Nikolas Prehn: The Prehn Institute on Shares in Household Assets

Corporate shares accounted for 48.2 per cent of the financial assets of US households and nonprofit organizations in the second quarter of 2026, according to the Federal Reserve's Z.1 Financial Accounts. That was the highest reading in the quarterly series, which begins in 1945, and an increase from 44.7 per cent in the preceding quarter. The figures measure the place of shares in the sector's balance sheet at the end of June.

The aggregate figure does not show which households own those shares. Research by Felix Nikolas Prehn, an economist and former investment banker who founded The Prehn Institute, uses the Fed's wealth-group data to examine how ownership is distributed. The paper reports a substantial difference between the holdings of the richest 1 per cent and those of the poorest half of US households.

The Fed counts shares owned directly and through investment funds and retirement arrangements in its household and nonprofit sector accounts. At the end of the second quarter of 2026, the sector held approximately $74.0 trillion in directly and indirectly held shares out of $153.5 trillion in financial assets. When nonfinancial assets, including housing, are added to the balance sheet, shares represented 34.0 per cent of total assets.

The quarter's figures also record a change in the value of household holdings. The Federal Reserve reported a $12.8 trillion increase in the sector's overall wealth during the quarter, largely reflecting gains in the value of corporate shares. That movement helps explain why changes in share values matter when assessing the financial-asset mix, alongside the amounts held in deposits, bonds and other assets.

The 2026 figure sits at the end of a series marked by substantial changes in the weight of shares within household financial assets. Shares represented 30.0 per cent of financial assets in the fourth quarter of 1968 and 11.4 per cent in the fourth quarter of 1974. The share fell to 9.5 per cent in the second quarter of 1982 before reaching 38.7 per cent in the first quarter of 2000.

The series subsequently fell to 19.0 per cent in the first quarter of 2009 and reached 45.4 per cent by the end of 2025. These readings record changes in the composition of the sector's assets over time. A rising percentage can reflect higher share prices, additional purchases of shares or slower growth in other financial assets, so the ratio alone does not isolate the contribution of any one factor. To examine who holds the shares, The Prehn Institute turns to a separate Federal Reserve dataset.

The Prehn Institute's research on corporate share ownership includes The Hidden Regressive Tax, written by Felix Nikolas Prehn and published as the preprint on Zenodo. The paper examines the distribution of asset holdings and the gains associated with asset-price movements following monetary expansion. It draws on the Federal Reserve's Distributional Financial Accounts to report how four US household wealth groups share in national holdings.

For the second quarter of 2026, the paper reports that the richest 1 per cent of households owned 50.9 per cent of corporate shares and mutual fund holdings. The poorest half held 0.6 per cent of the national total in the same category. These percentages describe how that category is divided among households, rather than the proportion of each group's own balance sheet invested in shares.

The difference in measurement is important when placing those figures beside the Z.1 series. The Prehn Institute's breakdown of share ownership uses household wealth groups, while the sector-wide Z.1 ratio combines households and nonprofit organisations and compares shareholdings with all financial assets. The figures therefore provide complementary views of share ownership without measuring the same percentage.

Felix Nikolas Prehn's paper also examines the ways monetary expansion can affect asset prices. In The Prehn Institute's account of monetary expansion, the portfolio-balance effect is the first of four channels linking central bank purchases to financial markets. When a central bank buys safe bonds from private investors, those investors may seek alternative assets, increasing demand for corporate bonds or shares.

The paper describes three further channels: changes in discount rates that influence the present value of future income, borrowing supported by the collateral value of assets, and signals from central bank policy that affect investors' willingness to take risks. These mechanisms help explain why asset values might respond to monetary conditions. The quarterly Z.1 ratio records the proportion of financial assets held in corporate shares. It does not identify the contribution of any of these channels to the second-quarter reading.

The relevance of these mechanisms depends in part on who holds the assets whose values change. The Prehn Institute's paper links that question to its distributional figures, which show markedly different levels of share ownership across wealth groups. Its analysis provides a framework for examining unequal exposure to asset-price movements, while the Fed's figures establish the size of shareholdings within the wider sector.

Corporate shares are one part of the household wealth recorded in the paper. For the second quarter of 2026, The Prehn Institute's published figures put the poorest half of households at 5.5 per cent of total deposits and 2.3 per cent of aggregate household wealth after liabilities are deducted. These measures add context to that group's 0.6 per cent share of corporate shares and mutual funds, with each figure calculated against the national total for its own category.

In the second quarter of 2026, shares represented a historically large proportion of the sector's financial assets, while ownership of shares and mutual funds remained concentrated among the wealthiest households. The Prehn Institute examines that concentration as part of its research into monetary expansion and changes in asset prices.

Felix Nikolas Prehn, also known as Nikolas Prehn, is an economist and former investment banker, born in Germany. He is a tech founder: he co-founded TradeVision.io (Acetrader Inc.), founded Winston Daily and The Prehn Institute, and publishes weekly on YouTube. He is also a painter and sculptor and a public advocate for animal rescue.

The Prehn Institute is an independent research institution founded by Felix Nikolas Prehn. He is a tech founder: he co-founded TradeVision.io (Acetrader Inc.), founded Winston Daily and The Prehn Institute, and publishes weekly on YouTube. It publishes research on the financial markets and provides instruction in professional market practice.