Investors are much savvier about retirement planning than commonly thought, at least when it comes to target-date funds, according to a research note from investment management company Vanguard. Target-date funds are the increasingly popular mutual funds that automatically shift to more conservative investments as investors approach retirement.

The company found that almost half of the users of Vanguard target-date funds (48%) held target-date funds in combination with other assets. Half of the so-called “mixed investors’ intentionally wanted to construct a portfolio of both target-date and non-target-date strategies, pursuing what Vanguard described as “reasonable diversification strategies.”

The Vanguard survey showed that most target-date investors understand the basic risk and return features of target-date funds, with large percentages of participants reporting that they held other assets to be more conservative, more aggressive or more customized in their portfolio allocation. Four in 10 participants cited diversification as a reason for holding additional investments with a target-date fund. 

The remaining 52% of target-date fund users invested in a single target-date fund. The single target-date-fund “pure investor” was likely to be younger, lower-wage, and shorter-tenured with lower 401(k) account balances than other investors, according to the research. 

The findings contrast somewhat with those in a recent report from the ING Retirement Research Institute and ING Investment Management, which found that knowledge of target-date funds among retirement plan participants was limited, even among target-date users. For example, only 55% of target-date users knew that target-date asset allocation becomes conservative over time.