Valley Forge, Pa.-based Vanguard reports that the average 401(k) participant invests 60 percent of his or her account balance in index funds.

The study, which looked at defined contribution accounts from 2004 to 2012, found that this percentage doubled for the time period analyzed. This is largely due to the growing popularity of index-based target-date funds, says Vanguard.

The report also found that the assets in actively managed funds, such as money market funds, stable value funds and company stock, declined significantly over the eight-year period.

In 2004, 39 percent of participants were invested exclusively in active funds. By 2012, this all-active group had dropped to 19 percent, a relative decline of 51 percent. Conversely, in 2004, 10 percent of participants were invested solely in index funds. By 2012, that figure was 38 percent, a nearly four-fold increase, says Vanguard.

The report also found that older, longer-tenured participants held 100 percent active portfolios, likely as a result of inertia, says Vanguard. This “inertia effect” is common among existing participants, many of whom never alter their initial allocations.

Younger, shorter-tenured participants tended to hold 100 percent index portfolios, largely because they were automatically enrolled in plans with index-based target-date funds as the default investment, says Vanguard.

The researchers also examined how participants allocated their ongoing contributions, which, according to Vanguard, is a better indicator of their future investing intentions than the current composition of their accounts.

From 2004 through 2012, the percentage of contributions that participants directed to index funds rose from 32 percent to 64 percent, while the percentage directed to active funds declined from 38 percent to 20 percent.

Another factor influencing participants’ transition to indexed investments is that more are included in their plan’s investment menu, according to the report. More indexed funds have been added to plan options in recent years because of the sponsors’ desire to reduce participants’ investment costs and exposure to active fund risk, says Vanguard. In addition, for participants who want to voluntarily choose their investments, target-date funds offer a simplified choice because they can be chosen based on the investors’ expected retirement age.

“The results of this report highlight the critical role that plan sponsors play in the investment strategy of participants,” said Cynthia Pagliaro, lead author of the report and an analyst in Vanguard’s center for retirement research. “Due to these behavioral effects, it is likely that the sponsor’s decision will have a profound influence on the investment choices made by their participants.”