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Trends in 401k Allocations

yogibearbullyogibearbull
edited August 17 in Fund Discussions
Trends in 401k Allocations

Equity allocations in workplace retirement 401k are rising, as the chart below from Vanguard shows. Some of it is due to the popularity of TDFs (target-date funds; glide-path allocations) as default (& popular) options within 401k. However, the retirement account holders are free to adjust their allocations, but typically don't. While the WSJ article may require subscription, the key chart linked/shown below shows the essence of the article.
WSJ (subscription) https://www.wsj.com/personal-finance/retirement/us-401k-retirement-stock-market-84cfe48d

I also track the overall allocations within all listed US funds - loosely, America's asset allocation. It also indicates rising equity allocations, but not as high as the Vanguard 401k data.
OEFs & ETFs: Stocks 61.34%, Hybrids 4.14%, Bonds 17.47%, M-Mkt 17.05%
https://ybbpersonalfinance.proboards.com/post/2119/thread

People should review their overall allocations periodically to see if they are comfortable with the current asset allocations.

https://i.ibb.co/n5Nf8ck/WSJ-Allocations-401k-081725.png
image

Comments

  • hank
    edited August 17
    Thanks @yogibearbull.

    A subscriber. Pulled up the article which bears out what I expected.

    ”Workers across nearly all age groups are investing record portions of their 401(k) accounts in equities. After years of relentless market gains, they are either allocating more to stocks or having it done for them by money managers.”

    Historically flows into these plans have increased when markets are hot but have fallen off during bear markets. Going from recollection. Perhaps someone will prove me wrong. But if correct … they’re doing it backwards. Ought to invest more in down markets.
  • rforno
    edited August 17
    My 403(b) remains entirely in dividend-paying equities in RWMGX. Thankfully Capital Group's funds aren't beholden to (or track) the Mag-7 that overweights indices and therefore forces insane performance-chasing. For some accounts, I boring is beautiful.

    The only changes to that account I'd consider making right now is shiftting a not-insignificant (25-40%) percentage into EUPAC (RERGX) for greater international diversification .. but I'm still on the fence.

  • Old_JoeOld_Joe
    @rforno- Interesting to see American Funds EuroPacific and Washington Mutual again after all these years. We used both of them (but class A) fairly heavily when we were in our accumulation phase. American Funds was really good about allowing us to group all of our various IRAs and non-retirement accounts to meet their minimum for no-load purchases.
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