Filed Under:Life Insurance, Life Planning Strategies

Survey: Reduce employer stock in 401(k) plans

The study attributes the under-performance of the portfolios examined to the fact they have a “large cap tilt” and a market beta of less than one (1).
The study attributes the under-performance of the portfolios examined to the fact they have a “large cap tilt” and a market beta of less than one (1).

Businesses that allocate higher than average amounts of employer stock to 401(k) plans tend to underperform those of their peers the following year, both in terms of relative performance and on a risk-adjusted basis, new research reveals.

Morningstar Investment Management discloses this finding in a report, “Employer Stock Ownership in 401(k) Plans and Subsequent Company Performance.” As a result of the findings, the paper argues against employees holding significant amounts of company stock.

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Nichole Morford

Nichole Morford
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