ICI, Brightscope 401(k) Plan Study
A press release titled, "ICI and ISS MI BrightScope Report 401(k) Plan Participants Continue to Benefit from Employer Contributions and Falling Fees" tells us, "The undeniable strength of the 401(k) system is seen in the report, The BrightScope/ICI Defined Contribution Plan Profile: A Close Look at 401(k) Plans, 2021, released ... by ISS Market Intelligence (MI) and the Investment Company Institute (ICI).... Plan sponsors' design choices also include the number and types of investment options in the 401(k) plan. In 2021, the average large 401(k) plan offered 28 investment options, typically including domestic equity funds, international equity funds, domestic bond funds, and target date funds." The study says, "In 2021, the average large 401(k) plan offered 28 investment options, of which about 13 were equity funds, three were bond funds, and nine were target date funds. Nearly all plans offered at least one domestic equity fund, international equity fund, and domestic bond fund." It continues, "CITs held 41 percent of large private-sector 401(k) plan assets in the sample in 2021. Mutual funds held 38 percent of assets, guaranteed investment contracts (GICs) held 5 percent, separate accounts held 3 percent, and the remaining 12 percent were invested in individual stocks (including company stock), individual bonds, brokerage, and other investments. However, mutual funds accounted for at least half of the assets in all but the very largest plans, where a larger share of assets was held in CITs." ICI writes, "In 2021, 43 percent of large 401(k) plan assets were held in equity funds, 31 percent were held in balanced funds (with most of that being held in target date funds), and 6 percent were held in bond funds. GICs and money funds accounted for 7 percent of assets." They say, "Domestic equity funds, international equity funds, and domestic bond funds -- all of which include both index and actively managed funds -- were the most likely investment options to be offered in large 401(k) plans in 2021.... Forty-five percent of large 401(k) plans offered money funds, and 71 percent offered guaranteed investment contracts (GICs)." It continues, "For most investment types, availability by plan size did not vary much. However, larger plans were more likely to offer other investments (which include company stock), GICs, and money funds.... Similarly, 32.7 percent of plans with less than $1 million in plan assets offered money funds in 2021, compared with 73.8 percent of plans with more than $1 billion." The survey states, "In 2021, large 401(k) plans included three bond funds (mostly domestic, including both index and actively managed funds) in their investment lineups, on average.... Plans also offered money funds, GICs, and other options. These investments were not offered as widely ... and were often included as the single choice in that investment type." Discussing expenses, the survey adds, "The average expense ratio for bond mutual funds in the BrightScope database was 0.31 percent, compared with 0.25 percent in the ICI database, and the expense ratio for money market mutual funds was 0.11 percent in the BrightScope database compared with 0.12 percent in the ICI database.... Money market mutual funds had the lowest expense ratio of any of the asset classes with an asset-weighted average expense ratio of 0.11 percent of assets in 2021 for money market mutual funds in large 401(k) plans."
