Individual account investment options and portfolio choice: Behavioral lessons from 401(k) plans

• 成果类型: Article; Proceedings Paper
• 署名作者: Brown, Jeffrey R.; Liang, Nellie; Weisbenner, Scott
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; National Bureau of Economic Research
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2007.03.012
• 发表日期: 2007
• 页码: 1992-2013
• 关键词: portfolio choice; behavioral finance; pension plans

摘要

This paper examines how the menu of investment options made available to workers in defined contribution plans influences portfolio choice. Using unique panel data of 401(k) plans in the U.S., we present three principle findings. First, we show that the share of investment options in a particular asset class (i.e., company stock, equities, fixed income, and balanced funds) has a significant effect on aggregate participant portfolio allocations across these asset classes. Second, we document that the vast majority of the new funds added to 401 (k) plans are high-cost actively-managed equity funds, as opposed to lower-cost equity index funds. Third, because the average share of assets invested in low-cost equity index funds declines with an increase in the number of options, average portfolio expenses increase and average portfolio performance is thus depressed. All of these findings are obtained from a panel data set, enabling us to control for heterogeneity in the investment preferences of workers across firms and across time. (c) 2007 Elsevier B.V. All rights reserved.