Defined contribution plan participants continued allocating assets into target-date funds, according to Vanguard Group's "How America Saves" report that it published last month. Last year, 40% of DC assets were invested in target-date funds compared with 33% in 2017.
The portion allocated to equity was 72%, which has been relatively constant each year since at least 2013. This includes the equity amount in target-date and balanced funds.
Generally, allocations to diversified equity funds increased with income but the target-date fund portion varied from income groupings. Partly due to this phenomenon, the median equity allocation was relatively constant across income groups, ranging from 85% to 89%.
Balanced funds, bond funds and cash had higher allotments as age increased. Diversified equity fund allocations increased up to the 45 to 54 age group before falling. Target-date fund allocations fell as age went up.
As one would expect, the median equity allocation fell starting in the 45 to 54 age group, dropping to 79% from 89%. For those 65 years old and older, the median equity allocation was 44%.
