Despite the historic equity market decline of 2008-2009, most 401(k) participants earned positive investment returns in the five-year period ended 2010, according to Vanguard. In fact, the average return was 3.76% a year, not including the impact of continued contributions.

In total, participants’ portfolios grew by an average of 20.27% over the period, due to these investment returns alone, Vanguard said. Participants approaching retirement had similar or better results. In total, 95% of participants earned a positive total return over the five years.

This is according to Vanguard’s report, “Participants During the Financial Crisis: Total Returns 2005-2010,” by Stephen P. Utkus and Shantanu Bapat.

Their research also found that participants using single target-date funds or managed accounts had dramatically lower dispersion of risk and return than those who had constructed their own portfolios.

“Among single target-date investors, equity exposure declines in a disciplined way over time, while among all other participants it is ‘hump-shaped,’” the report said.

Lee Barney writes for Money Management Executive.