It’s no secret that target-date funds have grown in popularity. A new Vanguard study, How America Saves, shows that 27% of plan participants were invested in single target-date funds at year-end 2012 and 51% of all participants use target-date funds. Also, 84% of sponsors offer target date funds, up 45% compared with 2007.
As plan sponsors have evolved their offerings for participants not wanting to construct their own portfolio, they have created a “menu-tiering” approach, says Jean Young, Vanguard senior research analyst. “What sponsors are doing when they look at their offer is…they’re positioning them as the first tier.” She adds that in the core line-up, sponsors are ensuring an indexed option.
