The Top 10 401(k) Target Date Funds Are …

Target Date Funds

This is just getting boring. The big three—Vanguard, Fidelity and T. Rowe Price—extended their lead in BrightScope’s latest independent ranking of the top 10 target date series by total 401(k) assets, released Tuesday.

“We’ve seen strong growth in the target date fund space driven by lower fees, a strong equity market and a shift in distribution model,” Brooks Herman, head of data and research at BrightScope, said in a statement. “Four years ago, BrightScope predicted that target date assets would top $2 trillion by 2020, and we stand by that prediction today.”

The company noted that the distribution channel is getting more competitive. Based on a sample of activity in 10,000 401k plans from 2010-2013, BrightScope observed a decrease in proprietary target date assets from 57% (2010) to 55% (2011) to 52% (2012) to 50% (2013). Plan sponsors are looking off-platform for the best target date funds for their employees.

Additionally, fees continue to fall. In examining fees for the lowest cost share class for each target date series in 2014, the average fee was .65 percent, down from .67 in 2013 and down almost 10 percent overall since 2011.

Lastly, assets are increasing; as of February 2015, Target Date Fund assets jumped to more than $700 billion in Investment Act of 1940 funds, an increase of 12 percent over last year’s figures. When collective investment trusts and pooled separate accounts are added, BrightScope estimates total target date assets to be closer to $1.1 trillion, a 22 percent increase over last year’s estimate and a 280 percent increase over the past five years.

The company adds that General Mills 401k Plan began using target date funds for the first time, giving Vanguard a $625 million mandate win in 2013. SunTrust Banks, Inc. 401k plan moved from T. Rowe Price target date funds to Vanguard in 2013. ADP TotalSource Retirement Savings Plan moved from MassMutual to Voya Target Date Funds in 2013.

BrightScope’s Top 10 Target Date Series

RankProvider NameTarget Date Series NameTotal 401k Assets
1Vanguard GroupTarget Retirement$78.1B
2T. Rowe PriceRetirement$59.4B
3FidelityFreedom K$45B
4FidelityFreedom$39.7B
5JPMorganSmartRetirement$11.3B
6Wells FargoAdvantage Dow Jones Target$10.3B
7FidelityAdvisor Freedom$10B
8FidelityFreedom Index$4.7B
9Principal Financial GroupLifeTime$4.5B
10American Century InvestmentsOne Choice$4B
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