An eventful year for target date funds resulted in overall target date asset growth of 15% in 2024, reaching $3.97 trillion as of year-end.
That’s one of many headline findings revealed today in a press release about Sway Research’s latest research report—The State of the Target-Date Market: 2025—Examining Asset Trends Across Providers, Products, Vehicles, Management Styles, and Glide Path Structures.
Among the other notable developments covered in the new report? Target date fund fees fell again in 2024, and there were big gains in target date assets at Vanguard Group, the largest provider of these products. The high-profile introduction of BlackRock LifePath Paycheck, which finished 2024 with $16.4 billion of assets under management—was another notable market development in the past year.
In addition, Collective Investment Trusts (CITs), which held $2.02 trillion of assets at the outset of 2025, overtook mutual funds as the largest holder of target date assets last year. Mutual fund target date series finished the year with $1.95 trillion of assets under management (AUM).
Trends such as these—covered in more detail below—highlight a rapidly evolving TDF landscape, and advisors who stay ahead of these developments can better position themselves as strategic partners for defined contribution plan sponsors.
CIT growth
Sway’s State of the Target-Date Market: 2025 report found that CITs once again experienced faster growth than mutual funds, a trend that is driven by a general shift toward lower-cost investments. From Jan. 1, 2022 to the close of 2024, assets in CIT-based target dates increased 12% annually vs. just 3% for assets in mutual fund series.
The shift from mutual fund target dates to CIT-based series is also reflected in 2024’s new product launches. Fourteen out of 15 target date series introduced in 2024 utilize CITs instead of mutual funds. At the end of 2018, there were 62 MF series and 61 CIT series available to U.S. investors. At the close of 2024, this had shifted to 98 CIT-based target-date series vs. only 51 mutual fund-based series (another is ETF-based).
As CITs continue to replace mutual funds, retirement plan advisors can focus on educating plan sponsors on their benefits, including lower costs and institutional pricing.
Vanguard TDF growth
According to the Sway findings, target date assets at Vanguard Group increased by nearly $200 billion in 2024, reaching $1.48 trillion at year end. At the outset of 2025, Vanguard managed 2.6 times as much in target date assets as the second largest provider, Fidelity Investments, which managed $560 billion.
Vanguard’s success is due, at least in part, to a general shift from target-dates that invest in actively managed underlying portfolios to those that invest nearly all of their assets in passively managed portfolios.
“Passive” target dates controlled $2.43 trillion at the conclusion of 2024, good for 61% of target date assets. “Active” target dates held $1.13 trillion, which equates to 29% of target date assets, while hybrid target date series, which invest in both active and passive underlying investments, held $408 billion, or 10% of the total invested in target date solutions.
This is the highest level achieved by hybrid target dates to date. In the 3 years ended Dec. 31, 2024, assets in passive target dates grew 8.4% annually—more than three times the rate of active target dates (2.6%). Hybrid target dates grew at a rate of 12.6%, but from a much smaller starting asset base.
flexPATH Strategies, the 10th largest provider of Target Date solutions, was the fastest-growing provider of substantial size (i.e., providers with $1 billion or more of target date AUM) in 2024. The firm’s target date assets expanded 32% during the year (from $39 billion to $52 billion), which the Sway press release attributes to its dense lineup of mostly co-manufactured products that are exclusive to specific DC plan recordkeepers. The firm introduced four target date series in 2024.
BlackRock LifePath Paycheck debut
Per the report, a dozen target date series now feature some form of optional post-retirement income, usually in the form of a deferred fixed annuity or group variable annuity with a guaranteed lifetime withdrawal benefit (GLWB).
Four of these series were launched in 2024, including BlackRock’s LifePath Paycheck, which finished 2024 with $16.4 billion of assets under management—a feat the Sway release called “a massive gain for a newly launched product.” The successful launch propelled LifePath Paycheck to finish the year as the 27th largest target date series out of 150 tracked by Sway Research.
A small group of insurance providers, including Lincoln (5 series), TIAA (4 series, including the Nuveen Lifecycle Income Index series, also introduced in 2024), and Nationwide (3 series), provide underlying income guarantees to most of the income-oriented target date series being offered today, while investors in BlackRock LifePath Paycheck are served by Equitable Financial and Brighthouse Financial. In total, Income Target Date series controlled $22 billion of investor assets at the outset of 2025.
Target date dees decline again
The Sway release revealed that asset-weighted expenses for the average MF-based active series fell to 53.3 basis points (BPs) from 54.9 at the end of 2023. Hybrid series slipped from 39.9 BPs to 39.1, while passive target dates dipped slightly from 8.9 to 8.7 BPs.
To add a longer-term perspective, the asset-weighted average for active mutual fund target date series was 17% higher (64.5 BPs) at the outset of this decade, hybrid target dates were 23% higher (50.7 BPs), and passive target date mutual fund series were 31% higher (12.6 BPs). The release said the decline in these asset-weighted averages is being driven by both the lowering of fees by target date providers and the growing attraction of lower-cost solutions—a trait that is also fueling the faster growth of assets in target date series that invest in passively managed portfolios.
Sway’s biannual in-depth study of the target-date market is based on a proprietary database of mutual fund and collective investment trust target-date portfolio and asset data, which included 150 target-date solutions with assets as of year-end 2024, spread across more than 6,000 mutual fund share classes and CITs. The data is harnessed to provide insights into shifts within the $4 trillion target-date market, including across products and providers, investment vehicles, underlying investments, management styles, and glide paths.
The complete 176-page report, featuring 100 exhibits, 36 data tables and 15 provider profiles, is available for purchase from Sway Research.
SEE ALSO:
• ‘Co-Manufacturing’ Trend Having Major Impact on New Target Date Series Launches
• BlackRock’s LifePath Paycheck Caps 2024 with $16B
• ‘Historic’ Expense Ratio Reduction at Vanguard as of Feb. 1
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
