Employers are increasingly looking to add index funds, exchange-traded funds or other low-cost selections to their 401(k) plans, according to a survey by Hewitt Associates. Seventeen percent said they are likely to replace at least one of their actively managed funds with an index fund this year, up from 8% who said so a year ago.
This could mark a big change for the 401(k) industry, which currently has 90% of its $1.5 trillion in assets in actively managed funds, The Wall Street Journal reports. Of course, this won’t change overnight, but sponsors’ appetite for low-cost funds is unquestionably growing. And this is despite the revenue sharing payments by some actively managed funds to plan sponsors as an incentive for including them on the platform.