Participants Want Simplified Investments in DC Lineups, per Vanguard

Target-date funds have become the dominant investment vehicle in defined contribution plans. According to Vanguard’s report, “Trends in Defined Contribution Lineups and Participant Behavior,” 61% of participants in plans using Vanguard as a recordkeeper were invested in a single target-date fund in 2025, an increase from 46% in 2016.

Report author Jeffrey Clark, head of defined contribution research at Vanguard, says automatic enrollments have been revolutionary to TDF adoption.

“When we look at our plans … those plans that have 1,000 or more participants, close to of those plans use an auto-enrollment design. When plans offer auto-enrollment, 94% of workers save for retirement,” Clark says, citing internal data. “Given that just about all of [the plans using auto-enrollment] are using TDFs, we feel that is probably the biggest driver in TDF usage and increases over the last 10 years.”

Increased use of TDFs and auto-enrollment features was also found in the 2026 PLANSPONSOR DC Plan Benchmarking Survey. PLANSPONSOR, like PLANADVISER, is owned by ISS STOXX. According to the plan benchmarking report, 88.4% of surveyed defined contribution plans offered TDFs. The survey found that 74.9% of plans with more than $1 billion in assets used automatic enrollment, as did 72.5% of plans with between $200 million and $1 billion in assets.

Across all plan sponsors surveyed, 50.2% said they offered automatic enrollment. Asked about their default investment for auto –enrolled participants, 66.3% of sponsors across all plan sizes offered a TDF.

Beyond the growth of TDF usage, Vanguard’s report suggests participants increasingly prefer simplified investment solutions.  

According to the report, 66% of participants reviewed held only one fund in 2025, including the 61% invested solely in a target-date fund. On average, Vanguard participants used 2.2 investment options in 2025, down from 2.7 options in 2016.

“Choice overload can certainly add complexity for participants when they are selecting allocations,” Clark says. TDFs “provide that option for participants who …would like an age-appropriate, well-diversified allocation that they know is essentially being professionally managed.”

Looking ahead, Clark said the trend of simplification through TDFs will remain.

“When you think about retirement plan investing, there really hasn’t been a product that has been so successful, especially when you consider the defaults [and] general participant inertia,” he says.

Vanguard’s report was based on data from its recordkeeping client plans from 2022 through 2025.