More than 100 U.S. corporate 401(k) plans made changes to their investment options in 2020 amid the challenges of the COVID-19 pandemic, continuing to emphasize cost savings in reviewing their fund lineups, a Pensions & Investment analysis of recently released 11-K filings shows.
Less than 1 in 8 plans disclosed changes in their lineups, but many of those that did so changed their index fund providers, with Fidelity Investments seeing a number of wins and Vanguard Group Inc. seeing a number of losses for the second year in a row.
P&I compared 880 11-K filings with the Securities and Exchange Commission between May 28 and June 30 with filings in 2020 and found that 101 U.S. corporate 401(k) plans added at least one investment option last year.
Those plans had assets totaling $229 billion and added 281 individual investment options and 21 target-date fund lineups from 57 managers in the year ended Dec. 31. Plans in that same universe removed 274 individual investment options and 15 target-date fund lineups from 66 managers during the same period.
Overall, the majority of changes involved equity investment options, data show.
As of Sept. 30, according to P&I data, the average asset allocation of corporate defined contribution plans within the 1,000 largest U.S. plan sponsors was 33.5% domestic equities; 24.6% target-date funds; 10.5% stable value; 7.8% fixed income; 7.2% sponsoring company stock; 7% other; 6.7% international equities; 1.9% cash; 0.5% inflation-protected securities; and 0.3% annuities.
Among the 880 11-K filings observed over the period, 67% of added funds were equity options, while 16% involved fixed-income funds. New target-date fund lineups accounted for 7% of changes, 3% in asset allocation/balanced funds and the rest in other asset classes. A total of seven plans also made new disclosures on record-keeper changes.
Among the 302 new investment options recorded in 11-K filings, plan sponsors turned most frequently to Fidelity Investments, adding 105 individual investment options, which totaled $1.9 billion as of Dec. 31, and two target-date fund lineups, which totaled $206 million in assets as of Dec. 31.