Mercer | Target Date Funds Highlights and Trends

Target Date Funds Highlights and Trends - Mercer US

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Target Date Funds Highlights and Trends
Calendar15 August 2019

Mercer's target date survey reviews over 60 target date fund strategies. Get the latest insights and findings in our 2018 and Q1 2019 Update.

  • Total target date fund (TDF) provider assets ended at $1. 7 trillion in 2018, essentially where it started the year; assets increased to $1.9 trillion in Q1 2019.
  • Largest provider had a 38% market share at the end of the first quarter of 2019 (larger than the next three providers combined).
  • While AUM growth is strong, there’s continued evidence that assets still roll out of TDFs around retirement, and some evidence this could be happening earlier than retirement.
  • Fee compression continues with even passive providers reducing fees.
  • For the first time a comparison was made between the Custom TDF market and off-the–shelf TDFs.  On average allocations looked fairly similar, although it appeared as if there were a few outliers in the Custom TDF market.
  • Overall, as at the end of 2018, the TDF market was estimated to be $2.1 trillion, around 27% of total US DC assets.  The off-the-shelf TDF market is estimated to be around four times the size of the Custom TDF market
  • For all these reasons Plan Sponsors should ensure they are continually reviewing their TDFs, and the tips the DOL issued in 2013 are a good start.

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