PLANADVISER - July/August 2017 - 9

investment focus
A Milestone for TDFs
Target-date funds are on the verge of reaching $1 trillion in assets
TARGET-DATE funds (TDFs) are
fast approaching a major milestone:
$1
trillion in mutual
fund assets.
At the end of June, assets stood at
$985 billion, putting the mark within
striking distance.
Coupled with favorable market
conditions-the Standard & Poor's
(S&P) 500 is up 17.9% over the 12
months ended in June-net new flows
into TDFs of $65.3 billion have contributed
to a 21.5% increase in the funds'
assets over that same period.
While market share in this space
is still dominated by the top three
managers-Vanguard (33.6%), Fidelity
(21.2%) and T. Rowe Price (16.5%)-
other managers in the top 10 have
displayed greater proportional growth.
Led largely by BlackRock's LifePath
Index series, that
At the end of
June, assets stood
at $985 billion.
Vanguard's flows of $43.5 billion
for the period represent the largest
absolute growth, translating to a relatively
lower but still impressive 31.1%
growth in target-date fund assets for
the firm. Still, they account for twothirds
of total target-date fund mutual
fund net flows. In line with Vanguard,
TIAA experienced healthy growth
of 33.3%, though the firm saw this
growth on a much smaller asset base,
ending the period with $37.0 billion
under management.
When viewed through the active/
passive lens, Vanguard continues to
stand atop the pack in sheer volume,
with index series from BlackRock
and TIAA exhibiting solid growth
rates as well. On the active side of
the table, American Funds had the
largest increase in assets, with $20.6
12-Month Flows
$50
$40
$30
$20
$10
$0
-$10
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
billion of net inflows. These flows, at
62.0%, represent a growth rate more
than three times that of other active
managers such as J.P. Morgan (17.7%)
and T. Rowe Price (16.1%).
American Funds' recent success
can be directly linked to the pricing
and performance of the firm's products.
The manager's lowest-cost, zero/
TDF Assets and Growth
firm's TDF assets
grew by 66.8%, while those for American
Funds grew almost as much.
$350
$300
$250
$200
$100
$50
$0
80%
70%
60%
50%
40%
30%
20%
10%
0%
zero, R6 class has displayed top decile
performance across all vintages over
the trailing three- and five-year periods
at relatively low net expense ratios-35
basis points (bps) through 46 bps. While
other indicators may suggest that
active management has seen its day,
this target-date fund series is proof to
the contrary. -Matt Cirillo
Source: Strategic Insight Simfund
All data as of June 30.
planadviser.com july-august 2017 | 9
Flows ($b)
Assets ($b)
12-month flow rate
12-month asset growth
Vanguard
Fidelity
T. Rowe Price
American Funds
J.P. Morgan
TIAA
Principal
American Century
Vanguard
Fidelity
T. Rowe Price
American Funds
J.P. Morgan
TIAA
Principal
American Century
John Hancock
BlackRock
John Hancock
BlackRock
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PLANADVISER - July/August 2017

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