UM07-11 - Investment Patterns and Trading Behavior in 401(k) Pension AccountsOlivia S. Mitchell
Previously the author evaluated trading patterns in individually-managed 401(k) accounts, demonstrating that most plan participants trade only rarely in their retirement accounts, though some do engage in active fund switching. Some of the trading results from employers altering fund menus; another portion is employee-initiated. The proposed new research project extends prior work by evaluating the impacts of trading patterns on investment performance, drawing on data provided to the researchers by Vanguard. The analysis will examine absolute and risk-adjusted returns, assessing how plan design influences trading, and showing whether participants who rebalance make or lose money compared to inattentive and active traders.
Publications (PDF)Working Paper(s):
Winners and Losers: 401(k) Trading and Portfolio Performance