The lagging stock market hasn’t turned investors away from equity investments, according to new research from the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI). In a five-year examination of 401(k) investment activity, asset allocation remained 70% unchanged.
Among all 401(k) participants (14.6 million) in the 2001 EBRI/ICI database, almost 70% of plan balances are invested directly or indirectly in stocks, despite the fact that, overall, U.S. equity markets declined by about 12% in 2001. Asset allocation in plans was virtually unchanged over the 1996-2001 period, with about 70% of 401(k) accounts invested in the equity market at year-end 2001. EBRI finds participants allocated 48% to equity funds, 17% to employer stock and 8% to balanced funds.
Most 401(k) account balances are small, EBRI found. About 11% of participants had balances exceeding $100,000, while 45% had less than $10,000. However, researchers noted, many workers have balances with former employers or have rolled amounts from former employer plans into IRAs, which are not included in the analysis.

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