Participants rely heavily on U.S. equities as it is, making them the favorite asset class in the plans tracked and accounting for 19.1 percent of net flows in the tracker.

They make up 33.6 percent of all assets in the tracker by market value — and while that's down from 2013's 35.5 percent, it's still considerably higher than other categories.

Cash flows into U.S. equities beat out fixed income (16.7 percent), international equity (12.3 percent) and stable value/money market funds (5.3 percent).

TDFs have been picking up steam for some time, of course, especially since DC plans are increasingly relying on them as default investment options.

However, the way investments are chosen for TDFs emphasizes a tendency among participants to choose investments they're familiar with — those inside the U.S.'s borders.

As a result, they're missing out, not just on global opportunities, but on the capacity to add greater diversification to their portfolios, Northern Trust said.

It's natural enough for participants to rely on what they know — U.S. equities — as investment choices. But because U.S. equities also make up such a large proportion of the investments in TDFs, a participant who relies on both in his portfolio will end up with a substantially larger share allocated within the U.S. than if he'd chosen either one or the other. 

"The risks of home-country bias include over-concentration in a single market and missed exposure to a wider set of opportunities," Jim Danaher, managing director, DC solutions at Northern Trust, said in a statement. 

"By offering a more balanced menu of U.S. and international equity options, along with target date funds, plan sponsors can help participants invest across the global equity opportunity set, which will position their portfolios for greater potential long-term gains," he added.

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