Are ETFs Poised to Gain More Market Share In 401(k)s? | ETF Trends

On average, 401(k) balances have gotten smaller since last year, making a case for the addition of exchange traded funds (ETFs) to be included among the investment choices.

The average 401(k) balance that has been held since 2003 fell 24.3% in 2008, according to the Employment Benefit Research Institute. This includes losses, gains, and employer/employee contributions, Adam Kommel for Mutual Fund Wire reports.

By year’s end, the average balance in retirement accounts was $86,513 for 401(k) type accounts.

The S&P 500 lost 37% in 2008. Overall, equities make up 56% of all assets in retirement accounts, and fixed-income makes up the other 41% of assets.

Target-date funds are showing great growth and popularity, with 31% of those invested choosing those funds. The number of twenty-somethings who were invested in a 401(k)s that chose target-date funds went from 19% in 2007 to 23% in 2008.

Does this leave the door wide open for ETFs? Read about which retirement plans incorporate ETFs here.

For more stories about retirement, visit our retirement category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.