LOCATION

George Washington University School of Business
Duquès Hall, Room 652
2201 G Street NW (main entrance on 22nd Street between G and H Streets)
Metro: Foggy Bottom Station

Bio: Irina Stefanescu

Irina Stefanescu is an economist at the Federal Reserve Board in Washington D.C.  She formerly taught finance at Indiana University, Kelley School of Business. She studies corporate pension plans and their relationship with sponsors. More recently, her research focused on 401(k) plans and conflicts of interest with various service providers. Her paper on “How corporate pension plans affect capital structure decisions” received the Wharton Research Data Services (WRDS) Award, while more recently another paper received the Best Paper award in the Financial Management journal. Her research was published in the Review of Financial Studies and Financial Management. She holds a Ph.D. in finance from University of North Carolina Chapel Hill.

 

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Abstract

It Pays to Set the Menu: Mutual Fund Investment Options in 401(K) Plans

by Irina Stefanescu

This paper investigates whether mutual fund families acting as service providers in 401(k) plans display favoritism toward their own funds. Using a hand-collected data set on retirement investment options, we show that poorly performing funds are less likely to be removed from and more likely to be added to a 401(k) menu if they are affiliated with the plan trustee. We find no evidence that plan participants undo this affiliation bias through their investment choices. Finally, the subsequent performance of poorly performing affiliated funds indicates that these trustee decisions are not information driven.

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