|
|
Jeffrey R. Brown, Nellie Liang, Scott Weisbenner
NBER Working Paper No. 13169*
Issued in June 2007
NBER Program(s): AG
PE
AP
The NBER Bulletin on Aging and Health provides summaries of publications like this.
You can sign up to receive the NBER Bulletin on Aging and Health by email.
---- Abstract -----
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.
*Published: Brown, Jeffrey R. & Liang, Nellie & Weisbenner, Scott, 2007.
"Individual account investment options and portfolio choice: Behavioral lessons from 401(k) plans,"
Journal of Public Economics,
Elsevier, vol. 91(10), pages 1992-2013, November.
Would you like an annual subscription to NBER Working Papers? Click
here for more information.
You may purchase this paper on-line in .pdf format
from SSRN.com ($5) for electronic delivery.
Information for subscribers and others expecting no-cost downloads
Machine-readable bibliographic record -
MARC,
RIS,
BibTeX
|
