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Who Benefits from Stock Buybacks?

A Look at America’s Top 1,000 Retirement Funds

The Tax Cuts and Jobs Act significantly reduced the federal corporate income tax rate. Reducing the tax encourages businesses to invest in the United States, fueling long-run economic growth. It also means companies will see an infusion of cash from their old investments. Companies are likely to share that infusion of cash with their shareholders, including through stock buybacks. Our recent paper reviews the economics of stock buybacks and explains that they do not displace long-term investment, and in some ways, even support it.

But, who are the shareholders of U.S. stocks standing to benefit from buybacks? While stock ownership is skewed toward higher-income households, many Americans access the U.S. stock market through employer-sponsored retirement plans, such as pension funds. We’ve created an interactive tool that shows how the top 1,000 retirement funds in the United States invest on behalf of employees, such as teachers, police officers, hospital workers, and others.

These pension funds, through investments in domestic equities, have a significant stake in the U.S. stock market, and thus have the potential to benefit from stock buybacks.


Our research is based on data made available by Pensions & Investments. We reviewed their data for the Top 1,000 pension funds in the United States.

Not every fund in the Pensions & Investments survey reported how they invested their assets. Within the survey, allocation was reported for 72 percent of defined benefit (DB) assets and 39 percent of defined contribution (DC) assets. To estimate the asset allocation of non-reporting plans to create the interactive tool, we assumed they had the same average as the plans that did report. The methodology below details the steps we took to apply reported averages to non-reporting plans.

First, the data was separated by different characteristics–sponsor type (corporate, public, union, or miscellaneous) and fund type (defined contribution or defined benefit)–for a total of eight categories. Asset allocation percentages were reported across 10 asset types for defined contribution plans and 10 asset types for defined benefit plans. To determine the average asset allocation for each of the eight categories, we completed the following steps:

  1. Multiplied the reported asset allocation percentage of each individual plan by the total amount invested by each individual plan to calculate the dollar amount invested in different assets. For example, if a single public DC plan reported 10 percent of its assets were domestic equities and the plan had a market value of $100 million, the plan would have $10 million of domestic equities. This calculation was completed for each individual plan that reported its asset allocation percentages.
  2. Added the dollar amount invested in each of the 10 different assets across the eight plan categories. For example, adding all the public DC plan domestic equities to arrive at the total amount invested in domestic equities by public DC plans.
  3. The aggregate asset amounts were used to find average shares of each of the 10 asset types across the eight categories. For example, to determine the average share of domestic equities across the public DC plans, the total amount of domestic equities reported by these plans was divided by the total amount of assets reported by these plans, arriving at an average share of domestic equities.
  4. The average share of each asset type for the reporting plans was applied to the total assets (reporting and non-reporting) of all eight categories to approximate the amount invested in each type of asset across all plans. This assumes the average for the plans that didn’t report their asset allocation. For example, if the average share of domestic equities reported by public DC plans was 20 percent, multiplying the total market value of public DC assets for all plans by 20 percent would approximate the total amount of domestic equities across all public DC plans, including those that did not report.