The use of indexing and TDFs, especially as a plan’s default option/QDIA, rather than individual investments — along with the growing popularity of CITs — is changing the DC money manager landscape.
While overall DC assets declined by 1.1%, Pensions & Investments reports that Vanguard, which increased assets by 4% over 2014, held the top position with $735 billion DC AUM, leveraging the trend toward indexing, TDFs and CITs — a powerful trifecta.
BlackRock inched ahead of Fidelity with similar growth, topping out at $608 billion compared with $607 billion for Fidelity. The Boston-based fund company lost 2.2%, due in part to the move toward open architecture and unbundling of investments and record keeping. Along with indexing and TDFs, BlackRock saw success with fixed income — perhaps at the expense of Pimco, which lost 32% of assets in 2015 and dropped to 12th overall.
The top 10 DC asset managers for 2015 include:
1. Vanguard
2. BlackRock
3. Fidelity
4. TIAA
5. T Rowe Price
6. Capital Group
7. SSGA
8. Prudential
9. JP Morgan
10. MassMutual
While there is some overlap, the list of top DCIOs in the small-to-medium DC market is a bit different, with successful firms relying on retail distribution and relationships with Elite Plan Advisors through focused DCIO wholesalers and value-add services.
The retail DC market is vastly different than the institutional market, driven by advisors who come in all shapes and sizes. Nonetheless, like institutional plans, index offerings, TDFs and CITs are having a huge impact there too.
Many plan advisors, especially Elites, rely on DCIOs for support and practice management tools. For the first time, DCIOs are starting to exit, with some consolidation of asset managers. On the one hand, retirement assets have become more important than ever to money managers; and yet, on the other hand, accessing and servicing the advisor sold DC market has never been so challenging.
Those challenges are likely to continue.
Opinions expressed are those of the author, and do not necessarily reflect the views of NAPA or its members.
