Abstract

http://ssrn.com/abstract=2112263
 
 

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It Pays to Set the Menu: Mutual Fund Investment Options in 401(K) Plans


Veronika Krepely Pool


Indiana University - Kelley School of Business - Department of Finance

Clemens Sialm


University of Texas at Austin - McCombs School of Business; National Bureau of Economic Research (NBER)

Irina Stefanescu


Federal Reserve Board, Washington D.C.

August 27, 2014


Abstract:     
This paper investigates whether mutual fund families acting as service providers in 401(k) plans display favoritism toward their own funds. Using a hand-collected dataset on retirement investment options, we show that poorly-performing funds are less likely to be removed from and more likely to be added to a 401(k) menu if they are affiliated with the plan trustee. We find no evidence that plan participants undo this affiliation bias through their investment choices. Finally, the subsequent performance of poorly-performing affiliated funds indicates that these trustee decisions are not information driven.

Number of Pages in PDF File: 70

Keywords: 401(k), pension plans, trustee, favoritism, mutual funds

JEL Classification: G23, J23

working papers series


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Date posted: July 19, 2012 ; Last revised: September 4, 2014

Suggested Citation

Pool, Veronika Krepely and Sialm, Clemens and Stefanescu, Irina, It Pays to Set the Menu: Mutual Fund Investment Options in 401(K) Plans (August 27, 2014). Available at SSRN: http://ssrn.com/abstract=2112263 or http://dx.doi.org/10.2139/ssrn.2112263

Contact Information

Veronika Krepely Pool
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States

Clemens Sialm
University of Texas at Austin - McCombs School of Business ( email )
Austin, TX 78712
United States
HOME PAGE: http://faculty.mccombs.utexas.edu/Clemens.Sialm/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Irina Stefanescu (Contact Author)
Federal Reserve Board, Washington D.C. ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States
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