Individual account investment options and portfolio choice: behavioral lessons from 401(k) plans
This paper examines how the menu of investment options made available to workers in defined contribution plans influences portfolio choice. Using unique panel data of 401(k) plans in the U.S., we present three principle findings. First, we show that the share of investment options in a particular as...
Gespeichert in:
| Hauptverfasser: | , , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
National Bureau of Economic Research
2007
|
| Schriftenreihe: | Working paper series / National Bureau of Economic Research
13169 |
| Online-Zugang: | Volltext |
| Zusammenfassung: | This paper examines how the menu of investment options made available to workers in defined contribution plans influences portfolio choice. Using unique panel data of 401(k) plans in the U.S., we present three principle findings. First, we show that the share of investment options in a particular asset class (i.e., company stock, equities, fixed income, and balanced funds) has a significant effect on aggregate participant portfolio allocations across these asset classes. Second, we document that the vast majority of the new funds added to 401(k) plans are high-cost actively managed equity funds, as opposed to lower-cost equity index funds. Third, because the average share of assets invested in low-cost equity index funds declines with an increase in the number of options, average portfolio expenses increase and average portfolio performance is thus depressed. All of these findings are obtained from a panel data set, enabling us to control for heterogeneity in the investment preferences of workers across firms and across time. |
| Beschreibung: | Literaturverz. S. 29 - 30 |
| Beschreibung: | 42 S. graph. Darst. 22 cm |
Internformat
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| 490 | 1 | |a Working paper series / National Bureau of Economic Research |v 13169 | |
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| 520 | 8 | |a This paper examines how the menu of investment options made available to workers in defined contribution plans influences portfolio choice. Using unique panel data of 401(k) plans in the U.S., we present three principle findings. First, we show that the share of investment options in a particular asset class (i.e., company stock, equities, fixed income, and balanced funds) has a significant effect on aggregate participant portfolio allocations across these asset classes. Second, we document that the vast majority of the new funds added to 401(k) plans are high-cost actively managed equity funds, as opposed to lower-cost equity index funds. Third, because the average share of assets invested in low-cost equity index funds declines with an increase in the number of options, average portfolio expenses increase and average portfolio performance is thus depressed. All of these findings are obtained from a panel data set, enabling us to control for heterogeneity in the investment preferences of workers across firms and across time. | |
| 700 | 1 | |a Liang, Jean Nellie |e Verfasser |0 (DE-588)124566790 |4 aut | |
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| index_date | 2024-07-02T22:41:31Z |
| indexdate | 2024-07-09T21:25:14Z |
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| spelling | Brown, Jeffrey R. 1968- Verfasser (DE-588)124510701 aut Individual account investment options and portfolio choice behavioral lessons from 401(k) plans Jeffrey R. Brown ; Nellie Liang ; Scott Weisbenner Cambridge, Mass. National Bureau of Economic Research 2007 42 S. graph. Darst. 22 cm txt rdacontent n rdamedia nc rdacarrier Working paper series / National Bureau of Economic Research 13169 Literaturverz. S. 29 - 30 This paper examines how the menu of investment options made available to workers in defined contribution plans influences portfolio choice. Using unique panel data of 401(k) plans in the U.S., we present three principle findings. First, we show that the share of investment options in a particular asset class (i.e., company stock, equities, fixed income, and balanced funds) has a significant effect on aggregate participant portfolio allocations across these asset classes. Second, we document that the vast majority of the new funds added to 401(k) plans are high-cost actively managed equity funds, as opposed to lower-cost equity index funds. Third, because the average share of assets invested in low-cost equity index funds declines with an increase in the number of options, average portfolio expenses increase and average portfolio performance is thus depressed. All of these findings are obtained from a panel data set, enabling us to control for heterogeneity in the investment preferences of workers across firms and across time. Liang, Jean Nellie Verfasser (DE-588)124566790 aut Weisbenner, Scott J. Verfasser (DE-588)124526942 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.> NBER working paper series 13169 (DE-604)BV002801238 13169 http://papers.nber.org/papers/w13169.pdf kostenfrei Volltext |
| spellingShingle | Brown, Jeffrey R. 1968- Liang, Jean Nellie Weisbenner, Scott J. Individual account investment options and portfolio choice behavioral lessons from 401(k) plans |
| title | Individual account investment options and portfolio choice behavioral lessons from 401(k) plans |
| title_auth | Individual account investment options and portfolio choice behavioral lessons from 401(k) plans |
| title_exact_search | Individual account investment options and portfolio choice behavioral lessons from 401(k) plans |
| title_exact_search_txtP | Individual account investment options and portfolio choice behavioral lessons from 401(k) plans |
| title_full | Individual account investment options and portfolio choice behavioral lessons from 401(k) plans Jeffrey R. Brown ; Nellie Liang ; Scott Weisbenner |
| title_fullStr | Individual account investment options and portfolio choice behavioral lessons from 401(k) plans Jeffrey R. Brown ; Nellie Liang ; Scott Weisbenner |
| title_full_unstemmed | Individual account investment options and portfolio choice behavioral lessons from 401(k) plans Jeffrey R. Brown ; Nellie Liang ; Scott Weisbenner |
| title_short | Individual account investment options and portfolio choice |
| title_sort | individual account investment options and portfolio choice behavioral lessons from 401 k plans |
| title_sub | behavioral lessons from 401(k) plans |
| url | http://papers.nber.org/papers/w13169.pdf |
| volume_link | (DE-604)BV002801238 |
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