Cerulli is predicting that TDFs, which seem to dominate DC plans today, will garner as much as 90% of new contributions by 2019. That’s good news for firms with a viable TDF strategy, but potentially devastating news for long-only, active equity managers without TDFs or those still struggling to break the all-important $1 billion barrier.
In their recently released report “Retirement Markets 2014: Sizing Opportunities in Private and Public Retirement Plans,” Cerulli predicts that 88% of all new contributions will go to TDFs (free registration required), up from 38% in 2013. In some larger plans, 50-75% of assets could be in TDFs, up from just 13.5% invested in TDFs in 2013. Cerulli is also predicting the growth of custom TDFs, which currently have just 8% of the TDF market, based on plan sponsor needs and demands. These include:
- desire to tailor investors to their unique demographic;
- flexibility of underlying strategies;
- more control over glide path; and
- harmonizing DC and DB plans.
TDFs are like a bull market that keeps on gaining momentum, with no end in sight. Will that run ever end? If so, what might replace it? Comments welcome — start a discussion below.
