Target-date funds, and other balanced products that blend equities with fixed-income instruments, continue to drive plan design evolution, particularly with younger workers and new hires, according to data jointly published by the Employee Benefits Research Institute and the Investment Company Institute.
In 2013, nearly two-thirds of recently hired 401(k) participants were invested in balanced funds, which include all fund types that mitigate risk by blending securities. Of that segment, three-quarters had more than 90 percent of their accounts in balanced funds.
Target-date funds are driving the change. Typically, other types of balanced funds don't reallocate holdings based on a participant's age, as TDFs are designed to do.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
