Tag: retirement plan investing

Use of Index Funds in 401(k)s Increasing

The use of index funds by plans in the BrightScope Defined Contribution Plan Database increased from 79% of plans and 16.7% of assets in 2006 to 91.3% of plans and 33.2% of assets in 2016.

The Importance of Rebalancing DC Plan Portfolios

Once they select the proper asset allocation for their retirement savings, defined contribution (DC) plan participants need to be prodded to rebalance their portfolios regularly to maintain the appropriate risk.

DC Plan Investors Challenged by Financial Illiteracy

Researchers argue that financial illiteracy impedes plan participants’ ability to determine how to invest their savings, and propose mandated employer-provided financial education to address limited employee financial literacy.

Impediments to Widespread Adoption of ETFs in DC Plans

Despite their advantages, the purpose of defined contribution plans and ability of recordkeeping systems to handle exchange-traded funds' unique traits keep them from being widely adopted by plan sponsors.
Art by Jackson Epstein

Investment Product and Service Launches

Schwab Adds Conestoga Fund to Mutual Fund List; GSAM Acquires Standard & Poor's Investment Advisory Services; and Firm Offers FDIC-Insured Alternative to Stable Value Funds.

DC Plan Participant Use of TDFs Continues to Grow

While target-date funds (TDFs) are intended to automatically diversify retirement plan participants’ portfolios, Vanguard found nearly one-third mix TDFs with other investments and “are pursuing what appear to be reasonable diversification strategies.”

Cerulli Foresees Increased Use of Managed Accounts in DC Plans

“Growing emphasis on financial wellness, concerns about lack of retirement income options within employer-sponsored plans, increasing customization for the participant, and fiduciary concerns could spur additional growth in managed accounts,” Cerulli contends.