Administration January 6, 2006

401(k) Plans More Steeped in Emerging Markets than Thought

June 1, 2006 (PLANSPONSOR.com) - Even though the majority of 401(k) plan participants with emerging market allocations invested less than 20% of their balances in these funds, nearly one fourth have between 20%-49% and just over 5% allocated half or more.
Reported by

In a study of 401(k) participant allocations to emerging markets, Hewitt Associates warns against concentrating assets too heavily in emerging market stocks, which are more volatile than other markets.

Hewitt found that among participants with any balances in emerging market equity funds, the average allocation is 16.4%.

According to the study, the concentration of 401(k) balances in emerging market equity funds among participants with any balances in these equities is as follows:

  • 70.2% of plan participants concentrate 1%-19%
  • 24.3% of plan participants concentrate 20%-49%
  • 3.7% of plan participants concentrate 50%-74%
  • 1% of plan participants concentrate 75%-99%
  • 0.8% of plan participants concentrate 100%

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