Investors are more likely to evenly distribute their retirement contributions if presented with a wider range of fund choices, according to University of Pittsburgh research.
The study, published in the Journal of Marketing Research, comprised of four experiments which showed investors find it easier to choose funds when only a handful are offered.
When a larger number of funds are available, the decision on where to invest becomes cognitively taxing, and people are more likely to rely on simple strategies (such as dividing contributions evenly) when deciding their portfolios.
But the researchers noted this type of decision-making could have a negative impact on investors, exposing them to increased risk and fluctuations in their portfolio.
Read more at University of Pittsburgh