Target-date fund assets increased to nearly $625 billion in 2013 up from $503 billion in 2012, in funds registered under the Investment Company Act of 1940, said retirement plan research firm BrightScope.
BrightScope estimates that total target-date fund assets, including funds not registered under the 1940 Act, is approximately $900 billion.
Brooks Herman, head of data and research at BrightScope, said the increase is due to plan executives’ ability to automatically enroll participants in target-date funds along with behavioral finance trends.
People are drawn to target-date funds because they are required to set asset allocations only once, at the beginning, Mr. Herman said in a telephone interview. Participants “set it and forget it,” Mr. Herman said.
Mr. Herman also said the average institutional share fee for all target-date funds continued to decline in 2013. The average institutional share fee dropped to 0.67% in 2013, down from 0.7% in 2012 and 0.72% in 2011.
Fidelity Investments, Vanguard Group and T. Rowe Price dominated the target-date fund scene in 2013, with 75% of total target-date fund assets, Mr. Herman said.
