Administration May 12, 2003

US Equity Funds Reign Supreme in 401(k) Plans

December 17, 2002 (PLANSPONSOR.com) - Domestic equity funds are the most common 401(k) plan investment option and account for more participant assets than any other asset class, a new study found.

Reported by

Fred Schneyer

The Eighth Annual Defined Contribution Survey conducted by CRA RogersCasey and the Institute of Management and Administration (IOMA) also found that the domestic equity funds were added to, or are under consideration by, more plans than any other asset class.

According to the survey, approximately 89% of plan respondents claimed at least one US equity option — either an equity index fund or an actively managed large, mid, or small-cap fund. Three quarters of respondents offered a balanced option, while 67% offered an international fund. Only 25% of plan sponsors surveyed offered their own company stock as an investment option.

Of 122 investment options added over the prior year, 41% were US equity funds. Balanced and lifestyle options accounted for 20% of the new offerings, while special investment options (mutual fund windows, self-directed accounts, loans, and company stock) made up another 16%.

Respondents reported 77 new investment offerings were under consideration at the time of the survey. US equity-oriented investments were identified for inclusion in 36% of those being evaluated. Special investment options (26%) and balanced and lifestyle options (21%) made up the bulk of the remainder.

The survey represented 263 retirement plans with total assets of $94 billion and nearly two million participants.