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Mutual Fund Assets – Two Thirds from 401k Plans and IRA

Mutual Fund Assets

Mutual Fund Assets Two Thirds from 401k Plans and IRA. The Investment Company Institute (ICI) recently issued an FAQ highlighting important facts about 401k plans. Overall, participant directed retirement schemes like defined contribution plans which include both 401ks and 403bs and IRAs represent 60% of the over $26.1 trillion in retirement assets.

Other facts from the ICI about 401ks with some information from EBRI (Employee Benefits Research Institute) include:

  • Investments in 401ks
    • 66% in equities including target date funds
    • 10% in capital preservation funds like stable vale, guaranteed investment contracts (GICs) and money market funds
    • 19% of mutual fund assets were held in 401ks; 47% in IRAs
  • Age matters:
    • Average account balance of investors in their 30s with 2-5 years tenure – $25,000
    • Average account balance of investors in their 60s with 30 years tenure – $275,000
    • Percentage of equities for investors in their 20s – 75%
    • Percentage of equities for investors in their 60s – 22%
  • Loans
    • 87% of plans offer
    • 20% of participants in those plans use loans
    • Average outstanding balance – $7,780

Participants stayed the course during the recession of 2008-09 with fewer than 4% opting out and less than 15% changing their asset allocation or contributions.

When the entire defined contribution market is calculated, the importance of participant directed, employer sponsored savings plans is further highlighted. IRAs, most of which emanate from defined contribution plans, shows the overall importance of participant directed retirement plans which is a major focus of the DOL fiduciary rule as IRA investors do not enjoy ERISA protection.

The overall retirement market including the stunning growth of target date funds and collective investments, not fully reflected in the ICI numbers, shows why money managers and advisors alike are focusing on retirement accounts of investors.

For more information on Mutual Fund Assets, The ICC offers additional resources at 401(k) resource center and our defined contribution plan publication page.

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein
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