Retirement Plan Mutual Funds Fell 4% Last Year

May 16, 2001 ( - Mutual fund assets held in employer-sponsored retirement plans totaled $1.2 trillion in 2000, a drop of 4% from a year earlier, according to the Investment Company Institute (ICI).

Mutual funds made up approximately 13% of the overall employer-sponsored market at year-end 2000, according to the study. The pension market is comprised of

  • $2.1 trillion in assets in private defined benefit pension funds
  • $2.6 trillion in private defined contribution pension funds and 457 plans
  • $3.1 trillion in state and local government employee retirement funds
  • $1.0 trillion in annuity reserves
  • $0.7 trillion in federal government defined benefit plans

Of the $2.5 trillion in mutual fund retirement assets at year-end 2000, $1.9 trillion (76%) was invested in U.S. domestic or foreign equity funds. US domestic equity funds alone comprise more than two-thirds, or $1.6 trillion, of mutual fund retirement assets.

Approximately $396 billion of mutual fund retirement assets are invested in fixed-income funds, roughly 16% of the total. Bond funds hold $171 billion, or 7%, of mutual fund retirement assets, while money market funds account for $225 billion, or 9%. The remaining 8% is held in hybrid funds ($186 billion).

Defined Contributions

Not surprisingly, 401(k) assets represent a significant portion of these mutual fund assets, nearly two-thirds (65%) of mutual fund defined contribution assets were held in 401(k) plans. Mutual funds now comprise an estimated 45% of the mutual fund market, up from just 9% in 1990.

Mutual fund assets in 403(b) plans were about 22% of mutual fund assets in defined contribution plans at year-end 2000, some $259 billion.

Participant Insights

Research by ICI and the Employee Benefit Research Institute (EBRI) found that the average 401(k) account balance, excluding plan loans, was $55,502 at year-end 1999, 18% higher than the average account balance the year before.

More impressively, workers in their sixties with at least 30 years of job tenure at their current employer had an average 401(k) account balance of $198,595.

At year-end 1999, just 18% of those eligible for loans had loans outstanding, according to the research. The average unpaid loan balance for these participants represents about 14% of their account balances, net of the unpaid loan balances.

The ICI’s Mutual Fund Factbook