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Portfolio > Mutual Funds > Bond Funds

Study: Plan Use Of Lifecycle Funds Grows

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More than 7% of 401(k) assets were invested in lifecycle funds at the end of 2007.

Researchers at the Employee Benefit Research Institute, Washington, and the Investment Company Institute, Washington, have published that figure in a new retirement asset investment review.

Lifecycle funds, also called “target-date” funds, are designed to serve the needs of individuals expecting to retire around a designated date.

The mix of assets in the funds is supposed to become more conservative as the target date of the fund approaches.

Here are some survey findings:

- About 25% of 401(k) participants were using lifecycle funds at the end of 2007.

- Almost 19% of the account balances of recently hired participants in their 20s were invested in lifecycle funds at the end of 2007, up from 16% at the end of 2006.

- About two-thirds of 401(k) participants’ assets were invested in securities through stock funds, the stock portion of balanced funds, and company stock.

- About one-third of the assets were in fixed-income securities such as stable-value investments and bond and money market funds.

- The share of 401(k) accounts invested in company stock fell by 0.5 percentage points, to 10.6% percent.

- 18% of eligible participants had borrowed against their 401(k) accounts, the same percentage as at the end of 2006. Loans averaged 12% of the remaining account balance.

- The average 401(k) account balance was $65,454, up from $61,346 at the end of 2007.


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