Asset Allocations in 401(k)s Changed Over Generations

Asset allocations in 401(k) plans changed over generations, according to 20 years of data from the Employee Benefit Research Institute.

Researchers looked at 401(k) investors in their 20s, comparing data collected in 2015 with 1996 data from the same age group. According to their research, 401(k) plan investors in their 20s invested a large portion of their accounts in equities, but the makeup of the investments changed over decades.  The investors’ asset allocations were less concentrated in equity funds and company stock, but more concentrated in balanced funds, which include target-date funds.

EBRI found the major reason for the change is today’s investors rely more on the automatic rebalancing feature of target-date funds.