The target-date fund industry experienced significant growth in 2024, with total assets rising 15 percent to reach $3.97 trillion by the end of the year, according to a new report from Sway Research.
Among several key developments, it highlighted the continued shift toward collective investment trusts, which after years of anticipation surpassed mutual funds as the largest vehicle for target-date assets. At the start of 2025, CITs held $2.02 trillion in target-date assets, while mutual fund-based target-date series accounted for $1.95 trillion.
CITs have been outpacing mutual funds in recent years, reflecting investors’ preference for lower-cost investment options. Between 2022 and 2024, CIT-based target-date assets grew at an annual rate of 12 percent, compared to just 3 percent for mutual fund target-date series.
The trend toward CITs was also evident in new product launches. Of the 15 target-date series introduced in 2024, 14 were structured as CITs rather than mutual funds. Over the past six years, the number of mutual fund-based target-date series has declined, while CIT-based options have grown substantially.
According to Sway's target-date fund research, Vanguard remained the dominant provider of target-date funds, with assets increasing by nearly $200 billion to $1.48 trillion in 2024. This cemented the firm as the clear market leader, managing more than double the assets of Fidelity Investments, the second-largest provider with $560 billion.
Vanguard’s continued expansion aligns with a broader shift in investor preference toward passively managed target-date strategies. By the end of 2024, passive target-date series held $2.43 trillion, or 61 percent of total target-date assets. In contrast, actively managed target-date series accounted for $1.13 trillion, or 29 percent, while hybrid strategies, which blend active and passive investments, grew to $408 billion, representing 10 percent of total assets.
“Passive target-date funds have maintained their growth trajectory, benefiting from investors’ preference for cost efficiency,” the report stated. “Meanwhile, hybrid strategies have seen the fastest growth rate, though from a smaller asset base.”
Among the fastest-growing providers was flexPATH Strategies, which saw its target-date assets expand by 32 percent in 2024 to reach $52 billion. The firm launched four new target-date series during the year, including the RetirePilot American Funds series, which finished 2024 with $478 million in assets.
One of the most notable developments in 2024 was the rise of income-oriented target-date funds, which incorporate post-retirement income features such as annuities. A total of 12 target-date series now offer these options, with four launching last year.
BlackRock’s LifePath Paycheck solution, an annuity-blended offering which it introduced last April, quickly gained traction to end the year with $16.4 billion in assets. The strong demand made it the 27th largest target-date series among the 150 tracked by Sway Research.
“Income-focused target-date funds are gaining attention as investors seek solutions for generating reliable income in retirement,” the report noted. “BlackRock’s LifePath Paycheck had a particularly strong debut, highlighting growing demand for these products.”
Several insurance providers play a key role in offering underlying income guarantees for these funds. Lincoln, TIAA, and Nationwide each support multiple series, while BlackRock’s LifePath Paycheck investors receive income guarantees from Equitable Financial and Brighthouse Financial, according to Sway's report.
In total, income-focused target-date funds held $22 billion in assets at the start of 2025.
The report also highlighted continued fee compression across target-date products. Asset-weighted expense ratios for actively managed mutual fund target-date series declined to 53.3 basis points in 2024, down from 54.9 basis points a year earlier. Hybrid strategies saw a slight decrease from 39.9 to 39.1 basis points, while passive target-date funds recorded a marginal decline from 8.9 to 8.7 basis points.
Over the past five years, Sway Research said expense ratios have dropped across all target-date categories, reflecting both competitive pressures and investor demand for lower-cost options. The decline in fees has also contributed to the growing appeal of passive target-date funds, which have continued to outpace active strategies in asset growth.
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