Research, analysis, and thoughts on retirement investments & the future of personalization
As we continue to move on from a rough 2020, it is interesting to look back at Target Date Fund (TDF) flows to get a glimpse into how participants saved for retirement or unfortunately failed to save or, even worse, took withdrawals. While this glimpse does not give the total picture due to other investments available in retirement plans, we can still glean some interesting intel from TDF flows, both at a savings level and how the TDF industry continues to shift and morph.
Mutual funds have been the preferred vehicle for Target Date Funds since TDFs' infancy. Because Target Date Funds employ a fund-of-funds structure, it made sense for TDFs to be offered in a mutual fund vehicle as well. However, the TDF market is transitioning to Collective Investment Trusts (CITs) as a preferred vehicle.
Now that we’ve entered the final quarter of 2019, let’s look back at the flows within the TDF industry. Overall for the quarter, the industry saw net inflows of $27.8 billion, or about a 1.3% increase over the end of 2Q19. Total AUM in TDFs hit nearly $2.2 trillion.