It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) Plans
Clemens Sialm () and
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Veronika Pool: Indiana University, Bloomington
Irina Stefanescu: Board of Governors of the Federal Reserve System
No 13-021, Discussion Papers from Stanford Institute for Economic Policy Research
This paper investigates whether mutual fund families acting as trustees of 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 and are costly to retirement savers.
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Journal Article: It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) Plans (2016)
Working Paper: It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) plans (2014)
Working Paper: It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) Plans (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:sip:dpaper:13-021
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