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 401(k) Specialist and 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. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.
