New research shows that 90% of large and mid-sized 401(k) plans offer target-date funds, but only slightly more than half of small plans have one or more target-date funds in their lineup.
Nearly 70% of large and mid-sized sponsors said participants like the target-date fund approach, while 57% of small plan sponsors said so.
However, only 17% of the assets in large plans are in target-date funds, while 23% of the assets in both mid-sized and small plans is in these funds. Large plans are considered those with more than $200 million in assets, and mid-sized are those with between $20 million and $200 million.
“The high acceptance of lifecycle funds by most mid and large plans reinforces our view that plan sponsors see these funds as an effective asset allocation solution for retirement plan investors,” said Chris Keating, head of institutional sales and client services at RiverSource.
“We believe that the adoption phase of lifecycle funds is nearly complete for mid and large plans, which should set the stage for a new breed of lifecycle funds and increased competition in the marketplace.”