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- W3124004283 abstract "Sponsors of defined contribution retirement plans typically limit the investment choices of plan participants to a small number of investment managers and a limited number of investment vehicles. Such restrictions may limit excessive risk-taking by participants but also may preclude opportunities for efficient diversification. Many college and university 403 (b) plans have restricted investment choices to the retirement annuities offered by TIAA-CREF, the current manager of over half of all 403(b) contributions. Using 10 years of historical data, we study the efficiency of this TIAA-CREF opportunity set relative to a larger set that includes several standard index funds. Extrapolations must be interpreted -with caution. Assuming optimal rebalancing, depending on loss aversion and diversification constraints, the historical sample of returns implies that over a 20-year remaining work life, an employee -with an expanded menu that includes standard index funds could gain over 40% in terminal wealth compared to one who is restricted to TIAA-CREF retirement annuities. Even when a naive diversification strategy of equally weighting (1/n) all available funds is used, the expandedmenu outperforms the restricted portfolio by more than 25% over20years. These differences generally are significant at conventional levels based on parametric and nonparametric testing and do not appear to result from idiosyncratic market performance durinz the sample period." @default.
- W3124004283 created "2021-02-01" @default.
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- W3124004283 date "2007-07-01" @default.
- W3124004283 modified "2023-09-26" @default.
- W3124004283 title "What's in Your 403(b)? Academic Retirement Plans and the Costs of Underdiversification" @default.
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- W3124004283 doi "https://doi.org/10.1111/j.1755-053x.2007.tb00088.x" @default.
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