Target-date funds are likely to have more than $1.1 trillion in defined contribution assets by the end of 2012, more than triple the $277 billion estimate for year-end 2008, according to a report by Cerulli Associates.
That 42.5% compounded annual growth rate dwarfs the 9.4% rate likely for the overall DC market, said D.J. Lucey, a senior analyst with Cerulli, in an interview.
With momentum from the passage of the 2006 Pension Protection Act, which paved the way for widespread use of auto-enrollment and auto-escalation for target-date default options, Mr. Lucey said its likely Cerullis estimates will turn out to be conservative.
Based on extensive interviews with plan sponsors, money managers and other market participants during the first half of the year, Cerullis report found a growing number of institutional asset managers looking to join the target-date fray, and greater use of commingled vehicles likely over the coming years, Mr. Lucey said.