Assets in target-date funds grew to $3.25 trillion last year, and an increasing portion of those assets are held in collective investment trusts, which tend to charge lower fees, according to a report from Sway Research. While overall TDF assets increased 19% last year from the total at the end of 2020, assets in CIT-based target-date funds grew by 27%, to $1.45 billion.
CIT-based target-date funds now hold 45% of non-custom target-date assets, while mutual funds hold 55%. By comparison, at the end of 2016, CITs held 35% of TDF assets and mutual funds held 65%.
Vanguard Group still has the biggest share of the TDF market of any of the asset management firms, with $1.19 trillion of target-date assets at the end of last year. Still, the report notes that its market share slipped a bit, to 36.6% at the end of 2021, down from 36.9% at the end of 2020.
Meanwhile, the Sway report shows Fidelity in the No. 2 spot with $465 billion of assets or 14.3%, up from 14.0% at the end of 2020. T. Rowe Price came in third with $382 billion of TDF assets, up 21% from 2020.
The pressure to cut costs is increasing interest in passive TDF strategies, according to the Sway report, and it’s also led some asset managers to start using exchange-traded funds in their TDF lineups. Series that use ETFs include JPMorgan SmartRetirement, JPMorgan SmartRetirement Blend, USAA Target Retirement and Franklin LifeSmart Retire Target.
“The combination of unwavering downward pressure on fees and the rise in asset managers building and/or buying proprietary ETF lineups means the trend of ETFs being added is likely only getting started,” Chris Brown, founder and principal of Sway Research, said in a statement. “Building scale and launching CITs are not the only ways to lower expenses.”
Broker-dealers that sold the defunct securities backed by Inspired Healthcare generated more than $100 million in fees and commissions.
FINRA barred the advisor, Sung Moo Cho, last month.
A new MetLife survey finds real estate professionals are increasingly steering clients toward tax experts as rising property values leave more sellers facing significant capital gains.
The independent broker-dealer expands its business development bench with a new recruiter and an internal promotion in the West.
The leading ultra-high-net-worth RIA joins other large wealth firms, including Raymond James and LPL, in creating executive roles focused on artificial intelligence strategy
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
