While TDFs have less assets than target risk funds (TRFs), they grew at a faster clip in the first quarter of this year, gaining 5% or $30 billion. TRFs lost $1.5 billion over that same period. Overall, TDFs stand at $648 billion, according to a recently released Ibbotson report.
For the quarter, the 463 funds from 51 companies that Ibbotson looked at gained 1.5%. That compares with 1.8% for the S&P and 1.4% for TRFs. Funds with less international equity exposure and more real estate and commodities did better.
Vanguard, T Rowe Price and JP Morgan had 60% of the gains, while BlackRock’s iShares, Allianz and JP Morgan led in growth by percentage of assets. The “Big 3” TDF manufacturers — Fidelity, Vanguard and T Rowe — still enjoy a 73% market share, but that percentage is dropping.
Ibbotson also publishes a “Glide Path Stability Score.” The firms with the lowest score — those with the fewest changes — were led by T Rowe Price and Great-West. Overall, TDFs which had higher exposure to domestic equities, lower credit quality and lower bond duration were generally rewarded over the last year. And diversification into non-U.S. equities and alternative asset classes generated significant headwinds for many TDFs.
