Target date funds highlights and trends

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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