Seyfarth Insight: "Style Drift" Within Retirement Plan Investment Options

What is "Style Drift"?

• 401(k) and other plans offer participants a menu of investment alternatives.
• Participants are advised of the investment parameters (or style) followed by the fund manager, e.g., large cap growth.
• If, in practice, there is a marked deviation from the stated investment parameters (e.g., the manager begins following a “value" style), "Style Drift" may occur.

Fiduciary Considerations

• Is the option still appropriate to include in the menu of investment alternatives?
• How does the style drift impact the menu?  Does the menu still provide a broad array of diversified alternatives?
• Are participant communication materials (e.g., fund fact sheets) still accurate or do they need to be updated to reflect the style drift?

If you think your investment alternatives may have experienced style drift, please feel free to call any member of our Employee Benefits & Executive Compensation Department who can advise you on possible steps to take.