With a wider choice of investment options in their retirementplans, participants are picking twice as many mutual funds toinclude in their plan portfolios, said the Spectrem Group in areport issued Wednesday.

Plan participants cited 37% of the time that diversification wasthe reason for choosing so many more funds: 5.3 on average in 2011,nearly double the 2.7 that participants included in their plans in1996, according to “Asset Allocation Decisions of PlanParticipants” on Spectrem’s Millionaire Corner website.

Not only do the data reflect the much larger selection of mutualfunds now offered by many plan sponsors—19.4 funds offered today in401(k) plans, compared to only 6.3 in 1996—but an increasingemphasis on diversification.

(Read ‘The Dollar’s Decline Drives Homes a Diversification Lesson’ atAdvisorOne.)

The number of funds that participants include has grownsteadily. In 2000, the average number chosen for inclusion in aparticipant’s plan from among those offered by a plan sponsor was3.4. In 2005, the number was 4.6.

Use of asset allocation funds is also on therise. According to Spectrem’s research, approximately 72% ofinvestors had the option of some kind of asset allocation fundoffered within their plans. Some plans included lifestyle funds;more included target date funds, but the biggest concentration ofplans, 34%, offered both kinds of funds as options.

In 2008, only 36% of plan participants availed themselves ofthese asset allocation funds. By 2011 that number had reached50%.

In addition to a broader selection of fund availability, anotherreason participants are opting for a wider variety of funds withintheir accounts is investment education.

In 1996, Spectrem says, employee education on their retirementplan investments was a “relatively new offering.” Now it is farmore common, and even though it can be difficult to detect thepoint at which education becomes advice, the company says that theamount of guidance, education and advice have all risensubstantially.