Net contributions to target-date funds topped $170 billion in 2021

Roughly 86% of last year's net inflows went into collective investment trusts, which now hold 45% of total TDF assets.

With net contributions of $170 billion flowing into target-date strategies in 2021, total assets in the funds reached a record $3.27 trillion, up nearly 20% from 2020, according to data from Morningstar.

Roughly 86% of net inflows, or $146 billion, went into collective investment trusts, which now account for 45% of total target-date strategy assets, up from 32% five years ago.

“Plan sponsors are attracted to the lower costs of these vehicles, and we expect their growing popularity to persist,” the company said in a release on its report on target-date strategies.

Fees continue to influence target-date fund flows, with the cheapest quintile of target-date share classes amassing $59 billion in 2021, up from $41 billion in 2020. Collectively, the three more-expensive quintiles had outflows of more than $38 billion.

[More: Suit against Vanguard focuses on big tax bills for target-date funds]