Target-date assets continued to increase in 2011, although at a slower rate than previous years, according to a survey from Morningstar.
Net assets in target-date funds totaled $378.5 billion last year, an increase of 11% from 2010, according to “Target-Date Series Research Paper; 2012 Industry Survey” which used existing Morningstar manager data.
Estimated net inflows increased 15.8% in 2011. The longest-dated funds saw the biggest inflows, with 2050+ funds increasing 37.7%. Net inflows for all target-date funds increased 22.1% in 2010, 38.7% in 2009, and 33.4% in 2008.
“It's still going at a healthy rate. It's not going as fast as it was in the past, one factor being there was a big burst of growth following target-date funds' designations as qualified default investment alternatives,” said Joshua Charlson, senior mutual fund analyst at Morningstar and co-author of the report.
Following the Pension Protection Act of 2006, which made target-date funds QDIAs, net inflows increased 76% in 2007.
“The available market is becoming smaller,” said Mr. Charlson. “Certainly, you look at the numbers on percentages of DC assets in target-date funds, it's getting up there. The initial growth rates were artificially high because of the first-time default options.”
Fidelity Investments reported $130 billion in total net target-date assets, up 4.2% from the previous year, although its market share dropped two percentage points from the previous year to 34%.
Vanguard's total net assets increased 15% to $92 billion, with its market share increasing one percentage point to 24%. T. Rowe Price's total net assets increased 12.5% to $63 billion, with its market share remaining flat at 17%.