As the debate continues to rage over whether ETFs will become popular in 401(k) plans, Brightscope has released a list of the most popular funds. Vanguard’s Total Bond Market remained at the top of the list, even as many are fleeing bonds in anticipation of rising interest rates. And the SPDR S&P 500 jumped to the second spot from number 13 as people try to ride gains in the stock market.
The arguments for ETFs are lower cost, greater transparency and more choice; the arguments against them weigh the trading issues for ETFs versus the ease of using index funds. Before iShares, the largest ETF provider, was sold to Blackrock, they were making a very strong push for ETFs in 401(k) plans. While that effort might continue, it may not fit with the overall DC strategy of the parent company, which seems to be focused on ETFs and fixed income, two of the most popular 401(k) investment categories.
