3,600 Large 401(k) Plans Have the Scale for Alternatives
https://staging.axiomaticdata.com/blogPosts/3-600-large-401-k-plans-have-the-scale-for-alternatives
If you're an alternatives manager trying to analyze or segment the defined contribution market, start here: about 3,600 401(k) plans with more than 100 participants hold more than $250 million each, and together they hold about $6 trillion. They have the scale to absorb an alternative option and the governance budget to evaluate one.
The top of the market
| Plan assets | Plans | Total assets | Participants |
|---|---|---|---|
| $250M to $1B | 2,458 | $1.2T | 11.4M |
| Over $1B | 1,126 | $4.8T | 31.0M |
| Over $250M | 3,584 | $6.0T | 42.4M |
| Under $250M | 49,413 | $1.6T | 23.5M |
Fewer than 7% of large 401(k) plans hold almost 80% of the assets. Counts are for plans that list their holdings.
What they look like
| $250M to $1B | Over $1B | |
|---|---|---|
| Offer a brokerage window | 38% | 51% |
| Use automatic enrollment | 61% | 65% |
| Median funds on the menu | 28 | 28 |
| Already hold a private alternative | 40 | 41 |
These plans already run institutional menus: collective trusts hold 43% of fund dollars in plans of $250 million to $1 billion and 79% in plans over $1 billion. Very few hold a private alternative yet: 81 of the 3,584, about 2%.
Who serves them
| Inferred recordkeeper | Plans over $250M | Their assets |
|---|---|---|
| Fidelity | 1,445 | $2.55T |
| Empower | 440 | $0.56T |
| Vanguard | 333 | $0.52T |
| Principal | 230 | $0.19T |
| Schwab | 215 | $0.22T |
| T. Rowe Price | 167 | $0.21T |
| Merrill / Bank of America | 108 | $0.18T |
Fidelity alone serves 40% of these plans and more than 40% of their assets. Any alternatives product aimed at the top of the market has to work on Fidelity's platform.
Which industries
Manufacturing sponsors the most of these plans (967 plans, $1.8 trillion), followed by professional, scientific and technical services (622), finance and insurance (459) and health care (309).
How to use it
Axiomatic Data can identify every one of these plans, along with their recordkeeper, adviser and current fund menu, and whether they already hold an alternative.
About the data
Figures cover 401(k) plans with more than 100 participants that list their holdings on Schedule H of Form 5500, for plan year 2024, excluding multiemployer plans. Recordkeepers are inferred from Schedule C and other filing data.
For more information, email us at info@axiomaticdata.com. The DCALTA (Defined Contribution Alternatives Association) conference is November 10 in New York City.
Originally posted on LinkedIn.