Younger workers favor target date funds in their retirement plan portfolios, according to a just-released study on plan asset allocation.
A joint study released Monday by the Investment Company Institute and the Employee Benefit Research Institute found that 64% of 401(k) participants in their 20s held target date funds. Only 45% of participants in their 60s invest in TDFs, according to the study results, which reflect data as of year-end 2016.
Target date funds tend to focus on growth at the outset, which attracts younger workers and reflects 401(k) plan design intentions.
In addition, recent plan-participant hires with two or fewer years of tenure at an employer use target date funds at a slightly higher rate than all plan participants, at a rate of 59% compared with 52%, according to the study.
“Retirement savers continue to invest heavily in equities through their 401(k) plans,” Jack VanDerhei, EBRI research director, said in a statement. “Though this is in large part driven by younger plan participants, savers in their 60s also remain focused on growth and held 55% of their 401(k) plan assets in equity investments.”