Bolstered by a soaring stock market, defined contribution assets under management climbed to $5.19 trillion last year, a 21.1% increase over the previous record of $4.28 trillion in 2012, according to Pension & Investments' annual survey of DC money managers.
Internally managed DC assets rose 18.1% to $4.65 trillion last year vs. $3.94 trillion in 2012 for U.S. institutional tax-exempt assets. The latest survey was based on responses from 261 companies; the previous survey covered 251 companies. Nine of the top 10 DC money managers produced AUM gains. Only Pacific Investment Management Co. LLC, Newport Beach, Calif., suffered a decline — down 7.5% to $191.4 billion last year vs. $206.9 billion in 2012. All types of DC plans posted AUM gains for assets managed internally. The largest category — 401(k) plans — rose by 31.4% to $2.76 trillion.
Assets for the category of balanced/asset allocation — a combination of target-date funds, custom target-date funds and balanced funds — advanced by 35.9% to $788.4 billion from 2012 for assets managed internally.
Most of this category belonged to target-date funds, whose $632.33 billion in internally managed assets last year represented a 36.9% increase from 2012. Custom target-date fund assets jumped 95.5% to $53.67 billion.
Although most of the largest DC money managers posted asset gains, many had such strong performances that each of the top 10 firms changed rankings in 2013 vs. 2012.
As P&I reported May 26, Vanguard Group Inc., Malvern, Pa., advanced to first place with $613.47 billion in total DC assets, replacing longtime leader Fidelity Investments, Boston, which reported $612.39 billion. Although Fidelity's AUM rose 16.9% from 2012, Vanguard's AUM jumped 27.9%.
Fidelity had been the overall leader since 1998. Vanguard was the leader in several internally managed plan categories at the end of 2013 — 401(k) plan assets, moving up from second place in 2012 to overtake Fidelity; profit-sharing assets, retaining first place; and 457 plan assets, advancing from third in 2012.
Vanguard also led several major internally managed asset categories: retaining the top spot for passive domestic equity and passive domestic fixed income, while surpassing Fidelity for balanced/asset allocation strategies.
Solely for target-date fund assets managed internally, Vanguard ($154.24 billion) was in a virtual tie with Fidelity ($154.55 billion) in 2013, narrowing the gap from 2012 when Fidelity reported $131.7 billion in assets vs. Vanguard's $106.4 billion.
Fidelity remained the leader in 2013 in institutional DC assets managed internally, DC assets in mutual funds managed internally and DC active domestic equity assets managed internally.