ICI: MMFs 2.5% of 401k Plans
ICI released a study entitled, "BrightScope/ICI Defined Contribution Plan Profile: A Close Look at 401(k) Plans," which shows trends in 401k plan investing. The study says, "This report in the BrightScope/ICI Defined Contribution Plan Profile series focuses on private-sector 401(k) plans in 2013.... With $4.7 trillion in assets at the end of the second quarter of 2015, 401(k) plans have become one of the largest components of U.S. retirement assets, accounting for nearly one-fifth of all retirement assets." On money funds, it states, "More than half of 401(k) plans (52.1%) offered money funds and about seven in 10 offered guaranteed investment contracts (GICs)." Among plans with over $1 billion in assets, 80.2% offered money funds, while 66.2% in plans between $500M and $1B had money funds. It says, "In 2013, nearly 45 percent of assets were held in equity funds, nearly 20 percent was held in balanced funds (with most of that being held in target date funds), and about 8 percent was held in bond funds. GICs and money funds accounted for 12 percent of assets.... GICs ([held] 9.7 percent of assets). Bond funds (mostly domestic) held 7.9 percent of assets and money funds held 2.5 percent." Given the $4.7 trillion total in 401k assets, money funds would represent about $117.5 billion of this total. (A footnote in the study adds, "Asset allocation in the BrightScope Defined Contribution Plan Database is broadly similar to the EBRI/ICI 401(k) database. At year-end 2013, the EBRI/ICI 401(k) database shows equity funds held 43.5 percent of assets, balanced funds held 22.6 percent, bond funds held 9.1 percent, money funds held 4.4 percent, GICs and other stable value funds held 7.0 percent, and company stock, other, and unknown assets accounted for the remaining 13.3 percent of assets.") On expenses, ICI says, "Money market mutual funds had the lowest expense ratio of any of the asset classes, with an asset-weighted average expense ratio of 0.18 percent of assets in 2013 for money market mutual funds in 401(k) plans.... Mutual fund expenses decreased between 2009 and 2013 in 401(k) plans.... Money market mutual funds experienced the largest percent decline in expenses, falling from 0.30 percent of assets in 2009 to 0.18 percent in 2013.... Some of the decline in money market mutual fund asset-weighted average expenses may be attributable to fee waivers, which increased substantially in money market funds due to the low interest rate environment following the market turmoil of 2008." In other news, The Wall Street Journal" writes, "J.P. Morgan to Increase Deposit Rates for Some Big Clients in January." It says, "J.P. Morgan Chase & Co. will raise deposit rates for some of its biggest clients in January, according to a person familiar with the matter, following the Federal Reserve’s decision to raise interest rates this month."
