Graphic: Passive assets soar in target-date funds
Assets under management in target-date strategies have soared almost 160% since 2016, with both active and passive implementations showing gains, based on data collected by P&I. But passive is growing faster. As of June 30, there was $1.5 trillion in passive target-date strategies, more than triple the $482 billion five years earlier. Over that same period, active strategies’ AUM rose to nearly $574 billion from $312 billion.*
Asset growth: Average assets in target-date strategies grew by 167% to more than $104 billion in five years. The share of target-date strategies as a percentage of managers’ total DC AUM was 29% as of June 30, up from 23% in 2016, although flat vs. 2020.**
Average U.S. fund AUM (billions)
Passive surge: Target-date assets in passive strategies grew to 72% of assets this year, compared with 61% in 2016. During that span, several notable DC fund companies shifted toward passive implementations, including Principal Financial and Charles Schwab.
Average target-date assets
by type (billions)
Varying allocations: Among strategies using a “to” retirement approach, BlackRock’s allocations ranged from 27% domestic equity to 68%, from 17% to 39% in international equity, and from 1% to 45% for fixed income. Among “through” strategies, Dimensional’s 2025 and 2035 target-date strategies were outliers, with 61% and 31% in real/inflation-protection assets, respectively. Vanguard’s domestic equity allocation ranged from 35% to 55%, and international equity ranged from 23% to 36%.
Target-date fund allocation by series and asset class
*2021 universe is 25 DC managers, while 2016 data was 26. **Among DC managers that have target-date strategies. Source: Pensions & Investments.
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