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The Most Popular Bond Fund

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When investors ask me to review their company’s 401(k) investment options, I can’t get over the lack of bond fund choices offered by the plans. More times than not, the choice is between a bond fund with a maturity too many years out for my comfort level, and one with credit risk that is far too high. Unfortunately the retirement plan advisors that put these plans together are more interested in conformity than coming up with a formidable bond lineup for participants.

According to a study released in October from BrightScope Inc., the PIMCO Total Return Fund was the most popular bond fund in the 401(k) market. The study looked at 50,000 plans across various record-keeping platforms and concluded that most 401(k) plans stick to names that they know and trust. “There is a lot of group thinking among retirement plan advisors,” said Ryan Alfred, president and cofounder of BrightScope, “People feel safer if they know their funds are in a lot of other plans.”

It’s no surprise that at the end of June there was a total of $380 billion invested in the 10 largest taxable bond funds, according to Lipper. Just over $200 billion, or 53%, was in one fund, the PIMCO Total Return Fund. If you’re retired or at a new company and have money stuck in a 401(k) with limited bond fund choices, then maybe it’s time you rolled it into an IRA, where you or a trusted advisor can make the right choice.

 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.