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 14, 2015

Journal of Finance, Forthcoming

Abstract:     
This paper investigates whether mutual fund families acting as service providers in 401(k) plans display favoritism toward their own affiliated funds. Using a hand-collected dataset on the menu of investment options offered to plan participants, we show that fund deletions and additions are less sensitive to prior performance for affiliated than for unaffiliated funds. 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 this favoritism is not information driven.

Number of Pages in PDF File: 79

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

JEL Classification: G23, J23


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Date posted: July 19, 2012 ; Last revised: August 15, 2015

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 14, 2015). Journal of Finance, Forthcoming. 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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