Gender split on target funds

Female retirement plan participants appear to display a greater inclination to place assets in target date funds than in target risk funds

Female retirement plan participants appear to display a greater inclination to place assets in target date funds than in target risk funds.

An analysis of the retirement plans administered by Massachusetts Mutual Life Insurance Co. showed that among women, average balances in target date funds are about double the amount in risk-based options. Among men in the plans, retirement balances are split evenly between target date and target risk funds.

Target date funds assume that investors will retire at a set date, and are set up to become more conservative as that date approaches. Target risk funds are designed to expose investors to a particular risk level.

The insurer serves some 1.2 million plan participants, of whom 42% are female and 58% are male.

The findings suggest that women are less comfortable picking investments than men, as 53.1% of women who took part in the MassMutual Retirement Plan Participant Survey said they prefer to spend as little time possible making investment choices, compared with 35.1% of men.

Male participants appear confident in deciding how to invest: 44.1% of them feel that way, compared with 25.9% of the women.

“I think target date funds may put [women] where they want to, and need to, be because of those tendencies,” said Elaine Sarsynski, executive vice president of MassMutual’s retirement services division.

Although the data also showed that balances for women trail those of men by about 40%, that isn’t necessarily correlated to a desire to spend less time making investment decisions, Ms. Sarsynski said. “We think what’s driving that is that women at times stay out of the work force, whether it’s to care for family members or children,” she said.

MassMutual polled 1,517 participants between Nov. 15 and Jan. 15.