More than a Quarter of 401(k) Participants Hold
Lifecycle Funds
December 18, 2008 (PLANSPONSOR.com) - At year-end
2007 more than 7% of 401(k) assets were invested in lifecycle
funds and one-quarter of 401(k) participants held lifecycle
funds, according to an analysis conducted by the nonpartisan
Employee Benefit Research Institute (EBRI) and the Investment
Company Institute (ICI).
The findings are part of the annual update of the
EBRI/ICI 401(k) database, and reflect that assets in
lifecycle funds represent 7.4% of total 401(k) assets in
the database, and 25.1% of participants in the database
were invested in lifecycle funds. The analysis found that
about two-thirds of 401(k) plans included lifecycle funds
in their investment lineup at year-end 2007.
Across all age groups, more new or recent hires
invested their 401(k) assets in balanced funds, including
lifecycle funds, the data shows. At year-end 2007, 28% of
the account balances of recently hired participants in
their 20s were invested in balanced funds, compared with
24% in 2006. At year-end 2007, almost 19% of the account
balances of recently hired participants in their 20s were
invested in lifecycle funds compared with 16% at year-end
2006.
The bulk of 401(k) assets continued to be invested
in stocks. On average, at year-end 2007, about two-thirds
of 401(k) participants' assets were invested in equity
securities through equity funds, the equity portion of
balanced funds, and company stock. However, the share of
401(k) accounts invested in company stock continued to
shrink, falling by 0.5 percentage point to 10.6% in
2007.
About one-third of 401(k) assets were in
fixed-income securities such as stable value investments
and bond and money market funds.