Target date funds gain traction in 401(k)s

More than 7% of 401(k) assets were invested in target date funds at the end of 2007 and 25% of 401(k) participants held the funds, according to an analysis released today.
DEC 18, 2008
By  Bloomberg
More than 7% of 401(k) assets were invested in target date funds at the end of 2007 and 25% of 401(k) participants held the funds, according to an analysis released today. The data, released from Washington-based Employee Benefit Research Institute and Washington-based Investment Company Institute, showed that target date funds, which are also called lifecycle funds, are becoming commonplace in people’s retirement accounts. Typically, investors chose a fund with a target date close to the year they expect to retire. The mix of assets in the funds becomes more conservative as the investor nears retirement. “The Pension Protection Act of 2006 and subsequent regulation included language that allowed employers to automatically enroll workers in their 401(k) plans and place them in an age-appropriate lifecycle fund if the employee did not make an investment choice. This provision is likely to increase the use of lifecycle funds in years to come,” Jack VanDerhei, EBRI research director and co-author of the study, said in a statement. The report, entitled “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2007,” also found that more recent hires invested their 401(k) assets in target date funds. At yearend 2007, 28% of the account balances of recently hired participants in their 20s were invested in balanced funds, compared with 24% in 2006, 19% in 2005 and about 7% in 1998.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.