Assets in target-date funds grew again in 2018, although growth was somewhat muted thanks to the fourth-quarter market downturn.
Mutual fund and CIT-based target-date solutions reached $1.77 trillion overall at year-end, up from $1.75 trillion at the end of 2017 and a year-over-year gain of 1.1%.
CIT-based solutions began 2018 with $638 billion in assets and ended the year at $677 billion for a gain of 6.1%.
However, mutual fund-based solutions declined 1.9%—from $1.11 trillion to $1.09 trillion—amid the stock market dip and of target-date trend where assets shifted from mutual funds to lower-cost CITs.
These are just a few of the findings featured in the latest in-depth research report from Sway Research titled, The State of the Target-Date Market: 2019, Examining Asset Trends Across Providers, Products, Vehicles, Management Styles, and Glide Path Structures.
Shift to Passive from Active Continues ‘Unabated’
Assets in target-date series that invest in passively-managed underlying funds reached 53.3% of mutual funds and CIT target-date assets in 2018, up from 51.2% a year prior.
Target-Date solutions that invest in actively-managed funds finished 2018 with 38% market share, down from 41.7% one year prior.
The largest manager of target-date assets remains Vanguard, which managed $649 billion at the end of 2018, up 4.1% from $623 billion a year earlier.
The “800-pound target-date gorilla,’ as Sway calls them, had 69% of the assets in passively-managed target-date solutions at the end of 2018. Vanguard controlled 36.4% of the assets in mutual fund-based target-dates and 37.3% of the assets in CIT-based target-dates (36.7% overall).
There was no change in the top-10 providers this year. Following Vanguard is:
- Fidelity ($245 billion AUM, 13.9% market share),
- Rowe Price ($223 billion, 12.6%),
- BlackRock ($151 billion, 8.5%),
- American Funds ($104 billion, 5.9%),
- P. Morgan ($85 billion, 4.8%),
- Principal ($56 billion, 3.2%),
- SSgA ($51 billion, 2.9%),
- Nuveen ($45billion, 2.6%), and
- American Century ($21 billion, 1.2%).
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.