Mutual Fund Revenue Sharing in 401(k) Plans

Veronika K. Pool, Clemens Sialm and Irina Stefanescu

No 30721, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: G11 G23 G28 G40 G50 H75 (search for similar items in EconPapers)
Date: 2022-12
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