401(k) Do-it-Yourselfers Fare Better in Q1

May 17, 2002 (PLANSPONSOR.com) - Self-directed investors in defined contribution plans fared better than the aggregated returns on mutual funds and separately managed accounts for the first quarter, according to new data.

The aggregate return for self directed broker accounts over the first quarter was 1.55%, compared with 1.16% for separately managed offerings – and just 0.37% for core option mutual funds, according to the Security Trust Company (STC) Quarterly Defined Contribution Investment Returns Index.

While those returns fell short of the 3.82% earned by the Dow Jones Industrial Average, they were well ahead of the 0.06% gain in the S&P 500 and the 5.39% loss suffered by the NASDAQ.

The average self-directed account balance in the index was $226,500.00, while the accounts had an overall allocation of:

  • 46.77% in equities,
  • 35.79% in mutual funds,
  • 11.54% in cash, and
  • 5.90% in corporate bonds and alternative investments


The data, drawn from STC’s database of 1,100 plans with combined assets of $7.13 billion, also found a 33% increase in the number of separately managed accounts in its defined contribution base, from 150 to 203 – on top of a 100% increase the prior quarter.  STC’s CEO Grant Seeger attributes this trend to daily valuation technology that has made separately managed accounts viable as options in participant-directed 401(k) plans. 

The STC Index is a quarterly analysis of investment returns on selected participant-directed defined contribution plans for which STC provides trustee and custodial services. The 1,100 plans include 2,200 IDAs and 203 separately managed accounts, and cover the activities of 465,000 participants.

Phoenix, Arizona-based Security Trust Company ( www.securitytrustco.com ) provides institutional back-office trust services for financial service providers – including brokers, investment advisors, money managers, and record-keepers/TPAs – and their customers.