The asset allocations of 401(k) retirement plan savers in their 20s at the end of 2015 differed significantly from the allocations of 401(k) participants in their 20s in the mid-1990s, according to a new study.
The Investment Company Institute (ICI) and the Employee Benefit Research Institute (EBRI) released “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2015,” which is an update of the original 1999 joint study that analyzed 1996 data.
The new study draws on 20 years of data analyzed in the EBRI/ICI series of annual studies on 401(k) participants’ activities, which allows for a cross-generational comparison of 401(k) investors in their 20s.
According to Sarah Holden, ICI’s senior director of retirement and investor research, “The data show that 401(k) plan investors in their 20s — whether the millennials of 2015 or the Generation Xers of 1996 — have invested a large portion of their accounts in equities, but the composition of these equity investments has changed.”
At the end of 2015, 401(k) plan participants in their 20s held 80% of their aggregate assets in equities, which is little changed from the 77% share for their counterparts in 1996, according to the study.
Compared with their counterparts 20 years ago, the millennial 401(k) investors were less concentrated in equity funds and company stock and more concentrated in balanced funds (which include target date funds).