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 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.
