Changes made to the investment lineups of corporate 401(k) plans in 2019 reflect U.S. sponsors' ongoing focus on cost savings, a Pensions & Investments analysis of recently released 11-K filings shows.
Changes to index fund lineups among plans were prevalent, with many adding to their passive tiers or changing index fund providers, with Fidelity Investments seeing a number of wins and Vanguard Group seeing a number of losses.
P&I compared reports filed between May 15 and July 10 with the Securities and Exchange Commission with filings in 2019 and found that 92 U.S. corporate 401(k) plans added managers of at least one investment option last year. Those plans had assets totaling $154 billion and added 189 new investment options from 44 managers in the year ended Dec. 31. Plans in that same universe removed 192 investment options from 62 managers during the same period.
Overall, the majority of changes involved equity investment options, data show.
Among the 942 11-K filings observed over the period, 62% of added funds were equity options, while 14% involved fixed-income funds. New target-date fund lineups accounted for 9% of changes, 1% in stable value funds and the rest in other asset classes.
Among the 199 new investment options recorded in 11-K filings, plan sponsors turned most frequently to Fidelity Investments, adding 52 individual investment options, which totaled $1.3 billion as of Dec. 31, and two target-date fund lineups, which totaled $325 million in assets as of Dec. 31.
Among plans that removed investment options in 2019, Vanguard Group was the most-affected manager. Twenty-four plans removed a total of 61 Vanguard-managed investment options. According to the previous year's 11-K filings, those funds had at least $2.1 billion in assets in plans as of Dec. 31, 2018. Not all funds' assets were disclosed.
Of the 92 recorded plans that added investment options in 2019, 16 plans added Fidelity-managed index funds to their lineup, and 23 plans removed Vanguard Group-managed index funds.
On the other side, seven plans removed actively managed investment options managed by Fidelity and two each removed Fidelity's Freedom lineup of target-date funds and individual index funds. Seven plans added Vanguard index funds, three added Vanguard active funds, two added Vanguard money market funds and one added a target-date fund lineup managed by Vanguard.