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

Veronika K. Pool, Clemens Sialm and Irina Stefanescu

No 18764, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: G02 G11 G23 H55 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-dem
Note: AG AP CF PE
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Citations: View citations in EconPapers (2)

Published as Veronika K. Pool & Clemens Sialm & Irina Stefanescu, 2016. "It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) Plans," Journal of Finance, American Finance Association, vol. 71(4), pages 1779-1812, 08.

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Related works:
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 (2014)
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