This is just getting boring. The big three—Vanguard, Fidelity and T. Rowe Price—extended their lead in BrightScope’s latest independent ranking of the top 10 target date series by total 401(k) assets, released Tuesday.
“We’ve seen strong growth in the target date fund space driven by lower fees, a strong equity market and a shift in distribution model,” Brooks Herman, head of data and research at BrightScope, said in a statement. “Four years ago, BrightScope predicted that target date assets would top $2 trillion by 2020, and we stand by that prediction today.”
The company noted that the distribution channel is getting more competitive. Based on a sample of activity in 10,000 401k plans from 2010-2013, BrightScope observed a decrease in proprietary target date assets from 57% (2010) to 55% (2011) to 52% (2012) to 50% (2013). Plan sponsors are looking off-platform for the best target date funds for their employees.
Additionally, fees continue to fall. In examining fees for the lowest cost share class for each target date series in 2014, the average fee was .65 percent, down from .67 in 2013 and down almost 10 percent overall since 2011.
Lastly, assets are increasing; as of February 2015, Target Date Fund assets jumped to more than $700 billion in Investment Act of 1940 funds, an increase of 12 percent over last year’s figures. When collective investment trusts and pooled separate accounts are added, BrightScope estimates total target date assets to be closer to $1.1 trillion, a 22 percent increase over last year’s estimate and a 280 percent increase over the past five years.
The company adds that General Mills 401k Plan began using target date funds for the first time, giving Vanguard a $625 million mandate win in 2013. SunTrust Banks, Inc. 401k plan moved from T. Rowe Price target date funds to Vanguard in 2013. ADP TotalSource Retirement Savings Plan moved from MassMutual to Voya Target Date Funds in 2013.
BrightScope’s Top 10 Target Date Series
| Rank | Provider Name | Target Date Series Name | Total 401k Assets |
| 1 | Vanguard Group | Target Retirement | $78.1B |
| 2 | T. Rowe Price | Retirement | $59.4B |
| 3 | Fidelity | Freedom K | $45B |
| 4 | Fidelity | Freedom | $39.7B |
| 5 | JPMorgan | SmartRetirement | $11.3B |
| 6 | Wells Fargo | Advantage Dow Jones Target | $10.3B |
| 7 | Fidelity | Advisor Freedom | $10B |
| 8 | Fidelity | Freedom Index | $4.7B |
| 9 | Principal Financial Group | LifeTime | $4.5B |
| 10 | American Century Investments | One Choice | $4B |
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
