IDEAS home Printed from https://ideas.repec.org/a/taf/ufajxx/v76y2020i1p20-37.html
   My bibliography  Save this article

Change Is a Good Thing

Author

Listed:
  • David M. Blanchett, CFA
  • Michael S. Finke
  • James A. Licato

Abstract

Do DC plan sponsors add value by monitoring and refreshing the menu of investments offered to participants? The authors find evidence that they do, particularly by successfully removing underperforming funds.Empirical research offers little evidence that monitoring defined-contribution menus adds value, despite the time, effort, and resources spent by plan sponsors on such activities. Using a unique longitudinal dataset of plan menus from January 2010 to November 2018 that included 4,215 fund replacements, we found that the replacement fund outperformed the replaced fund over future one-year and three-year periods. The outperformance remained even after we controlled for various fund characteristics and risk factors. It can be attributed primarily to the subsequent underperformance of replaced funds and to the lower expense ratios of the replacements.Disclaimer: Two of the authors’ companies offer menu services for defined-contribution plans.Editor’s noteSubmitted 12 June 2019Accepted 17 September 2019 by Stephen J. Brown

Suggested Citation

  • David M. Blanchett, CFA & Michael S. Finke & James A. Licato, 2020. "Change Is a Good Thing," Financial Analysts Journal, Taylor & Francis Journals, vol. 76(1), pages 20-37, January.
    • Handle: RePEc:taf:ufajxx:v:76:y:2020:i:1:p:20-37
    DOI: 10.1080/0015198X.2019.1682426
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/0015198X.2019.1682426
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/0015198X.2019.1682426?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ufajxx:v:76:y:2020:i:1:p:20-37. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/ufaj20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.