Mutual Fund Revenue Sharing in 401(K) Plans

69 Pages Posted: 5 Dec 2022 Last revised: 11 Jun 2023

See all articles by Veronika Krepely Pool

Veronika Krepely Pool

Vanderbilt University - Finance

Clemens Sialm

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

Irina Stefanescu

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: December 2022

Abstract

Recordkeepers in DC pension plans are often paid indirectly in the form of revenue sharing from third-party funds on the menu. We show that these arrangements affect the investment menu of 401(k) plans. Revenue-sharing funds are more likely to be added to the menu and are less likely to be deleted. Overall, revenue-sharing plans are more expensive as higher expense ratios are not offset by lower direct fees or by superior performance. Rebates increase with the market power of the recordkeeper suggesting that third-party funds may revenue share to gain access to retirement assets.

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Suggested Citation

Pool, Veronika Krepely and Sialm, Clemens and Stefanescu, Irina, Mutual Fund Revenue Sharing in 401(K) Plans (December 2022). NBER Working Paper No. w30721, Available at SSRN: https://ssrn.com/abstract=4293634 or http://dx.doi.org/10.2139/ssrn.4293634

Veronika Krepely Pool (Contact Author)

Vanderbilt University - Finance ( email )

United States
615-343-0277 (Phone)

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)

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Cambridge, MA 02138
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Irina Stefanescu

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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