More and more retirement savers have their entire 401(k) account in just a single mutual fund, and investment advisers are fine with it.
Last year, for the first time, more than half of Vanguard’s 4.6 million retirement account participants were invested in a single target-date retirement fund, according to an analysis by the mutual fund giant.
That may sound anathema to an industry that preaches the value of diversification, but those funds are designed to provide it for investors in one package. And after years of trying to manage their own investments, savers are finding it easier to pick one fund that does the job, even if the fees may sometimes be higher.
The stakes are high that workers choose wisely because they’re increasingly in charge of their own retirement savings, with traditional pension plans rare and pressures mounting on Social Security.
“People need to get two things right: They need to save enough, and they need to invest appropriately,” said Jean Young, senior research analyst with the Vanguard Center for Investor Research. “That sounds easy, but it’s not.”