At year-end 2024, 67% of Vanguard participants were in a professionally managed allocation—an all-time high—and that figure’s grown steadily for more than 10 years. That translates to more than a decade of improved allocations, more disciplined investing, and the positive reshaping of participant investment behavior.
Read our latest research for an examination into the role professionally managed allocations play in helping participants better prepare for retirement.
What’s a professionally managed allocation?
Investors with a professionally managed allocation—such as a target-date fund or a managed account service—have essentially put a financial professional in charge of their investments. So, instead of investors trying to figure out how to invest their money, specialists do it for them. This structure can help participants improve their age-appropriate risk exposure and avoid the pitfalls they might encounter if trying to manage their portfolios on their own.
One of the main benefits of a professionally managed allocation is an appropriate exposure to stocks and, therefore, the elimination of extreme portfolios—that is, investing too much or too little in stock for one’s age.
Who is using them?
In our research, younger participants are more likely to have a professionally managed allocation, giving them an appropriate level of equity risk over the course of their investing lives. Unfortunately, older participants are more likely to build their own portfolios, opening themselves up to more extreme portfolios—either having too much or too little invested in equities.
But investors should consider tempering equity exposure as they grow older. Too much equity can leave them more susceptible to drastically affected account balances in extreme market conditions. Retirees who withdraw money during a market downturn—especially during the first few years of retirement—may run the risk of not being able to regain losses if the market eventually turns around.
So, it’s important to remember that as older participants approach retirement, they’ll want to preserve—and possibly grow—the savings they’ve spent a lifetime accumulating in a diversified, well-balanced portfolio.
The interactive chart below shows the equity exposure of participants age 55 or older. The percentage of participants (y-axis) in professionally managed allocations had an equity exposure (x-axis) mostly in the 30%-to-80% range. Do-it-yourself investors had equity exposure from 0% to 100%.
Explore the chart
Learn more about professionally managed allocations and why they could be important to people managing their own portfolios in our latest research.
Also, look for the full How America Saves 2025 report, loaded with data and insights on participant saving behavior, coming in June.
Notes:
- All investing is subject to risk, including the possible loss of the money you invest.
- Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the work force. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target date funds is not guaranteed at any time, including on or after the target date.
- Diversification does not ensure a profit or protect against a loss.
- There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.