The survey, conducted by Burgess & Associates
for John Hancock, which offers the lifestyle funds, found
that plan participants who chose their own allocations
could have had average returns 2.96% higher if they would
have went with the lifestyle fund. The survey also found
that 93.5% of lifestyle fund participants came out with
results that beat the S&P 500 Index.
“This study demonstrates that for a significant majority of our 401(k) plan participants, over the last five years, choosing lifestyle portfolios has been a better investment strategy than choosing their own asset allocations,” Ed Eng, John Hancock’s senior vice president of product development, said in a release about the study.
Other findings of the study include:
- 88.7 % of participants who chose their own asset allocations would have had a higher ending balance if they invested in a single lifestyle portfolio that corresponded to their risk score.
- Based on their beginning account balances, the average annual return earned by participants who had chosen to allocate all of their contributions to a single lifestyle portfolio was more than double the return earned by non-lifestyle participants: 6.02% versus 2.66%.
Based on beginning account balances, subsequent inflows/outflows and ending balances, the study looked at the investment returns of over 162,000 John Hancock 401(k) plan participants that contributed through an ARA group annuity contract issued by John Hancock USA.