Target date funds continue to gain momentum in DC plans, according to a study by P&I of 200 of the largest plans. Covering the year ending Sept. 30, 2013, the survey showed a 26.6% increase in TDF assets — down slightly from the 29% increase in the previous year. Though market gains accounted for much of the increase, 37% of the gains are from inflows, according to research by Morningstar. Their research shows TDFs at $620.8 billion at the end of 2013, up 28% from 2012.
Due to better education, auto-enrollment and greater allocation to equities, younger people are more heavily invested in TDFs, according to EBRI. In 2012, 52% of people in their 20s used TDFs, compared with 37% of those in their 50s and 34% of people in their 60s. EBRI’s 2012 data show that 41% of all DC participants were invested in TDFs, up from 39% in 2011 and 19% in 2006; their data show 15% of all 401(k) assets in TDFs in 2012, up from 13% in 2011.
