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Defined Contribution

Vanguard getting nice boost from FAANG funds

As the five FAANG companies have seen huge growth in their defined contribution assets, it has been a boon for Vanguard Group's target-date business.

Four of the five fast-growing businesses — Alphabet Inc., Amazon.com Inc., Facebook Inc. and Netflix Inc. — use Vanguard as their target-date manager. Vanguard managed $9.3 billion for the plans in target-date funds as Dec. 31, 2017 up 57.1% from $5.92 billion the year prior, according to the companies' latest Form 5500 filings.

BlackRock (BLK) provided the target-date series for Apple Inc., the fifth member of the FAANG gang, climbing to $2.67 billion in assets at year-end 2017 vs. $1.85 billion at year-end 2016.

Target-date funds have grown at a torrid pace among the FAANG stocks.

For example, Alphabet Inc.'s Google Inc. 401(k) Plan had $6.34 billion in target-date assets as of Dec. 31, 2017, according to the latest Form 5500, representing a 51% gain over Dec. 31, 2016. By year-end 2017, target-date funds accounted for about 59% of the 401(k) plan assets. At year-end 2016, target date funds accounted for approximately 55% of total plan assets.

The Apple 401(k) Plan reported $2.67 billion in target-date fund assets as of year-end 2017, up 44.5% over one year, according to the latest Form 5500. As of Dec. 31, 2017, target-date funds represented approximately 39% of the plan's assets. At year-end 2016, target-date funds accounted for about 35% of total plan assets.

The Amazon.com Inc. 401(k) plan posted a 65.3% increase in target-date fund assets over the one-year period ended Dec. 31, 2017, rising to $2.04 billion, or approximately 49% of total plan assets, according to the latest Form 5500. By year-end 2016, target-date funds accounted for about 43% of total plan assets.

The Facebook Inc. 401(k) Plan had the biggest percentage gain of target-date funds among the FAANGs — rising 97.6% over the same one-year period to $747 million as of Dec. 31, 2017, according to the latest Form 5500. Target-date funds accounted for approximately 58% of total plan assets as of year-end 2017, up from about 53% of total plan assets as of year-end 2016.

The Netflix 401(k) Plan showed a smaller plan can still have a big gain in target-date fund assets — rising to $162 million at year-end 2017. That was a 60.4% increase over one year, according to the latest Form 5500. As of Dec. 31, 2017, target-date funds represented 44% of total plan assets vs. 41% at year-end 2016.