PLANSPONSOR - January - February 2024 - 30
INVESTMENTS
Are You on Track?
Target-date funds have evolved; demographics have changed too
T
he earliest target-date funds were
presented as professionally managed
funds that gave the investor
a diversified portfolio he did not have to
manage himself. Industry experts agree
that
that
exists. Yet, over the past 30 years, the
funds' market has significantly evolved.
The earliest TDFs were mutual fund
series, and now target-date strategies are
available in mutual funds, along with
collective
investment
trusts, managed
accounts and exchange-traded funds.
According to data from Morningstar,
as of 2022, $2.82 trillion of retirement
plan assets sit in target-date funds, and
approximately 60% of 401(k) plan participants
use the funds. Investor interest
in them is durable too. That same year,
investors deposited a net $153 billion
into target-date strategies. This number
eclipsed that of flows for mutual funds
and ETFs, which, in fact, saw $370 billion
in outflows for 2022.
Morningstar data show that much
of those new flows are going into CITs
that provide target-date strategies. These
funds brought in $121 billion in 2022,
compared with mutual funds' $32.3
billion. This figure is notable as it represents
a key evolution within the TDF
industry, aimed at keeping costs low.
Morningstar's asset flow data show
that plan sponsors are also converting
many of their mutual fund target-date
funds into CITs. In 2022 alone, more
than $56 billion of target-date mutual
funds were converted to CITs-almost
triple 2021's total. Plan sponsors can
keep the same investment strategy when
they convert to a CIT, which is cheaper to
operate, meaning the sponsors can maintain
essentially the same offering but at a
lower total cost.
Cost is not the only factor causing
30 PLANSPONSOR.COM January - February 2024
Art by Greg Clarke
core value proposition still
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PLANSPONSOR - January - February 2024
Table of Contents for the Digital Edition of PLANSPONSOR - January - February 2024
INSIGHTS
PARTICIPANT ANALYSIS
RULES & REGULATIONS
UPFRONT
What’s Around the Corner?
A Focus on Guaranteed Income
Navigating ESG
Are You on Track?
Demographic Shifts
Advice on Advice
Fiduciary Best Practices
2 Distinct Roles for When Sponsors Act
The DOL’s Not-So-New Fiduciary Rule
Continuous Good Service
PLANSPONSOR - January - February 2024 - Cover1
PLANSPONSOR - January - February 2024 - INSIGHTS
PLANSPONSOR - January - February 2024 - 1
PLANSPONSOR - January - February 2024 - 2
PLANSPONSOR - January - February 2024 - 3
PLANSPONSOR - January - February 2024 - PARTICIPANT ANALYSIS
PLANSPONSOR - January - February 2024 - 5
PLANSPONSOR - January - February 2024 - RULES & REGULATIONS
PLANSPONSOR - January - February 2024 - 7
PLANSPONSOR - January - February 2024 - 8
PLANSPONSOR - January - February 2024 - 9
PLANSPONSOR - January - February 2024 - UPFRONT
PLANSPONSOR - January - February 2024 - 11
PLANSPONSOR - January - February 2024 - 12
PLANSPONSOR - January - February 2024 - 13
PLANSPONSOR - January - February 2024 - 14
PLANSPONSOR - January - February 2024 - 15
PLANSPONSOR - January - February 2024 - What’s Around the Corner?
PLANSPONSOR - January - February 2024 - 17
PLANSPONSOR - January - February 2024 - 18
PLANSPONSOR - January - February 2024 - 19
PLANSPONSOR - January - February 2024 - 20
PLANSPONSOR - January - February 2024 - 21
PLANSPONSOR - January - February 2024 - A Focus on Guaranteed Income
PLANSPONSOR - January - February 2024 - 23
PLANSPONSOR - January - February 2024 - 24
PLANSPONSOR - January - February 2024 - 25
PLANSPONSOR - January - February 2024 - 26
PLANSPONSOR - January - February 2024 - 27
PLANSPONSOR - January - February 2024 - Navigating ESG
PLANSPONSOR - January - February 2024 - 29
PLANSPONSOR - January - February 2024 - Are You on Track?
PLANSPONSOR - January - February 2024 - 31
PLANSPONSOR - January - February 2024 - Demographic Shifts
PLANSPONSOR - January - February 2024 - Advice on Advice
PLANSPONSOR - January - February 2024 - 34
PLANSPONSOR - January - February 2024 - 35
PLANSPONSOR - January - February 2024 - Fiduciary Best Practices
PLANSPONSOR - January - February 2024 - 37
PLANSPONSOR - January - February 2024 - 2 Distinct Roles for When Sponsors Act
PLANSPONSOR - January - February 2024 - The DOL’s Not-So-New Fiduciary Rule
PLANSPONSOR - January - February 2024 - Continuous Good Service
PLANSPONSOR - January - February 2024 - Cover3
PLANSPONSOR - January - February 2024 - Cover4
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