Blog: Study examines prevalence of target date fund investing – Financial Regulation News – Financial Regulation News

Investment Company Institute (ICI) and Employee Benefit Research Institute (EBRI) study findings determined target date fund investing continues to be prevalent in 401(k) plans.

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Officials said 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2019 is based on the ICI/EBRI database of employer-sponsored 401(k) plans, with information gathered through a collaborative research project embarked upon by the organizations for 26 years.

“Target date funds continue to be a popular and convenient investment choice for 401(k) plan participants,” ICI Senior Director of Retirement and Investor Research Sarah Holden said. “Target date funds offer both portfolio diversification at every point in time and automatic rebalancing over time, helping investors of all ages manage their asset allocations as they save for retirement.”

The analysis showed, per authorities, among those with two or fewer years of tenure, 65 percent held target date funds, compared with 57 percent of participants with more than 10 to 20 years of tenure – and 43 percent of participants with more than 30 years of tenure.

More 401(k) plan participants possessed equities at year-end 2019 than before the financial crisis of 2008; two-thirds of participants in their twenties had over 80 percent of their 401(k) plan accounts invested in equities at year-end 2019; and overall, nearly 95 percent of 401(k) participants had at least some investment in equities at year-end 2019.

EBRI Director of Wealth Benefits Research Craig Copeland said 401(k) plan participants continue to invest heavily in equities primarily via equity funds and target date funds.

“Younger 401(k) plan participants who remain more focused on growth as they invest in their futures tend to have a higher emphasis on equities,” he said.

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