Research summary

Professional portfolio management paves the way for participant well-being

July 06, 2022

More rebalancing, less trading
Participants with professionally managed allocations

Vanguard defined contribution plans

Bar chart shows the percentage of Vanguard defined contribution plan participants using a managed account program, holding a single target-risk or traditional balanced fund, or holding a single target-date fund for each year from 2012 through 2021. The percentage of participants holding a single target-date fund increased from 27% in 2012 to 56% in 2021, while the percentage holding a single target-risk or traditional balanced fund declined from 6% to 1% and the percentage using a managed account program grew from 3% to 7%.
Professional portfolio management enhances portfolio diversification
Trend in asset allocation by participant age

Vanguard defined contribution plans (average equity allocation participant weighted)

Line chart shows trends in asset allocation by participant age during four years: 2005, 2010, 2015, and 2021. In 2005, younger participants [(those age 25 or under)], held less than 60% in equities and, in peak-equity years (35–44), never reached 75%. The equity allocation bottomed around 40% at age 70+. In 2010, investors aged 25 and younger held an equity allocation greater than 80%; that number trended downward throughout the age cohorts, bottoming at around 40% at age 70+. In both 2015 and 2021, equity allocations for those under age 25 around 90%, remaining elevated through a good part of middle age, then bottoming out at slightly more than 40% at age 70+.
Incorporating elements of professional portfolio construction in plan design

Contributor

Jeff Clark
Vanguard Insights

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