With a wider choice of investment options in their retirement plans, participants are picking twice as many mutual funds to include in their plan portfolios, said the Spectrem Group in a report issued Wednesday.
Plan participants cited 37% of the time that diversification was the reason for choosing so many more funds: 5.3 on average in 2011, nearly double the 2.7 that participants included in their plans in 1996, according to “Asset Allocation Decisions of Plan Participants” on Spectrem’s Millionaire Corner website.
Not only do the data reflect the much larger selection of mutual funds now offered by many plan sponsors—19.4 funds offered today in 401(k) plans, compared to only 6.3 in 1996—but an increasing emphasis on diversification.
(Read ‘The Dollar’s Decline Drives Homes a Diversification Lesson’ at AdvisorOne.)
The number of funds that participants include has grown steadily. In 2000, the average number chosen for inclusion in a participant’s plan from among those offered by a plan sponsor was 3.4. In 2005, the number was 4.6.