Sway Research finds that assets invested in target-date mutual funds and CITs reached $3.25 trillion at the end of 2021—a gain of 19% over year-end 2020.
Assets in mutual fund-based solutions expanded 14% to finish the year at $1.80 trillion, while CIT-based target-dates grew 27% to end 2021 with $1.45 trillion.
CIT-based target-date solutions, which typically offer lower expenses than mutual funds, now control 45% of non-custom target-date assets to 55% for mutual funds.
This mix was 35%/65% CIT to mutual funds at the end of 2016. Eight out of 10 of the largest target-date providers, including each of the top-5, experienced greater asset growth from CIT-based target-date funds than target-date mutual funds in 2021.
These are just a few of the findings featured in the latest in-depth research report from Sway Research—The State of the Target-Date Market: 2022, Examining Asset Trends Across Providers, Products, Vehicles, Management Styles, and Glide Path Structures.
Vanguard dips slightly
Passive-management giant Vanguard Group continues to dominate target-date assets, yet the firm lost a smidgen of asset share in 2021, despite reaching a colossal $1.19 trillion of target-date AUM by year end, up from $1 trillion at the close of 2020.
The firm saw its share of target-date assets slip from 36.9% at year-end 2020 to 36.6% in 2021, while its closest competitors gained share. No. 2 in target-date AUM, Fidelity Investments saw its target-date asset share climb from 14.0% to 14.3%, as its target-date assets reached $465 billion.
Fidelity’s growth was sparked by its fast-growing passive target-date solutions. The firm’s FIAM Index Target Date (CIT) and Fidelity Freedom Index products were the fastest-growing target-date series (among those with more than $1 billion of AUM at the start of 2019) over the past three years.
At the end of 2018, just 15% of Fidelity’s target-date assets were managed in solutions that invested in passively-managed underlying funds, but this more than doubled to 33% by the end of 2021.
Providers in the No. 3 to 6 positions also gained ground. T. Rowe Price saw its target-date assets rise 21% year-over-year to close 2021 with $382 billion of target-date AUM.
BlackRock, which holds 99% of its target-date AUM in solutions with passive underlying investments, gained 25% to finish 2021 with $328 billion.
Nos. 5 and 6, Capital Group/American Funds and SSgA, each experienced asset growth of 27% to end 2021 with $248 billion and $122 billion of target-date AUM, respectively.
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.
