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Large, Small, International: Equity Portfolio Choices in a Large 401(k) Plan

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by Julie Agnew and Pierluigi Balduzzi

WP#2004-14  

Abstract

We examine equity portfolio choices of a panel of over four thousand 401(k) investors during the April 1994-August 1998 period. In the majority of participant/year observations all the equity funds available are held; hence, it appears that most participants take full advantage of the diversification opportunities within the plan. Older investors hold more U.S. large equities and less international equities, consistent with more conservative investment on their part. There is also a positive trend in allocations to domestic equities at the expense of foreign equities, consistent with a revision of mean return estimates over the sample.

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Julie Agnew is a visiting assistant professor of finance and economics in the William and Mary School of Business Administration. Pierluigi Balduzzi is an associate professor of finance and economics in the Carroll School of Management at Boston College. The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) to the Center for Retirement Research at Boston College (CRR). The opinions and conclusions are solely those of the authors and should not be construed as representing the opinions or policy of the SSA or any agency of the Federal Government or of the CRR. The authors thank Stefan Bokor for his great help in organizing the data.
Tags: Private Pensions, Working Papers,
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