Journal
JOURNAL OF FINANCE
Volume 70, Issue 2, Pages 805-838Publisher
WILEY
DOI: 10.1111/jofi.12232
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Funding
- Kepos Capital Award
- Stanford Institute for Economic Policy Research
- REGA Capital Management
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Participants in defined contribution (DC) retirement plans rarely adjust their portfolio allocations, suggesting that their investment choices and consequent money flows are sticky and not discerning. However, participants' inertia could be offset by DC plan sponsors, who adjust the plan's investment options. We examine these countervailing influences on flows into U.S. mutual funds. We find that flows into funds from DC assets are more volatile and exhibit more performance sensitivity than non-DC flows, primarily due to adjustments to the investment options by the plan sponsors. Thus, DC retirement money is less sticky and more discerning than non-DC money.
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