| Summary: | 碩士 === 元智大學 === 財務金融學系 === 97 === The purpose of this study is to examine the relationship between institutional holdings and the selection of investment options into 401(k) plan over the period 2001 to 2004. The empirical results indicate that the likelihood of a fund being selected into a sponsor firm’s 401(k) plan is positively related to the percentage of 401(k) sponsor firm’s outstanding shares held by the fund’s family. However, the 1-year and 3-year risk-adjusted returns of 401(k) funds with share holding relationship do not perform worse than other 401(k) funds that do not have such share holding relationship. The results indicate that the existence of institutional ownership between sponsor firms and fund families will affect the probability of member funds being selected into sponsor’s 401(k) plans, but such relationship does not necessarily breach the fiduciary duty of 401(k) sponsor firms. Moreover, there is a by-product of the analysis that the higher the turnover ratio of a fund, the higher the likelihood that this fund will be selected into sponsor’s 401(k) plans, a result consistent with the “hidden fees of actively trading” argument that are widely suspected in the pension fund industry.
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