The Markets July 19, 2023

American Funds Sees Strongest TDF Inflows in Q2

Vanguard saw the second most inflows, according to Simfund, as overall target-date fund assets ended at a robust $1.63 trillion.

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American Funds, owned by Capital Group, saw the strongest inflows into target-date funds in the year’s second quarter, according to the latest data from ISS Market Intelligence’s Simfund, which, like PLANADVISER, is owned by Institutional Shareholder Services Inc.

American Funds brought $5.1 billion into its TDF investments in the quarter, still the highest among competitors, but less than the $7 billion it saw in Q1, according to Simfund’s TDF market insights. The Vanguard Group’s TDF inflows were close behind at $4.2 billion in the quarter, and Fidelity Investments came in a distant third in inflow size at $844 million.

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Other firms saw net outflows from their funds in the quarter, most notably T. Rowe Price ($650 million), J.P. Morgan Funds ($627.9 million), and Principal Funds ($240.2 million).

The inflows by manager were:

TDF Manager

Q2 Net New Flows, MM

American Funds

5,106.4

The Vanguard Group

4,155.3

Fidelity

843.8

BlackRock

811.3

State Street Global

480.1

TIAA

383.5

PIMCO LLC

253.2

MFS

200.0

Voya Investments

136.1

Schwab

109.8

GuideStone Capital Management

57.2

Dimensional Fund Advisors

40.0

Natixis Advisors

4.7

Total

$12.6 Billion


Overall assets held in TDFs ended Q2 strong as markets strengthened, compared with the end of 2022 and the start of 2023. Overall assets clocked in at $1.6 trillion at the end of June, a 12% increase when compared to all of 2022’s $1.46 trillion in assets.

If the trend holds for the year, TDF assets could hit another record in 2023: TDF asset have grown year-over-year in every 12-month period except two going back to 1990, according to Simfund. The growth dropped off once during the global financial crisis of 2008 and again in 2018 on global slowdowns in growth.

TDF Assets 2020

TDF Assets 2021

TDF Assets 2022

TDF Assets Q2 2023

1,549,922

1,765,407

1,459,159

1,633,369

 


Vanguard and Fidelity still hold commanding leads ahead of American Funds in terms of total assets held. As of the end of Q2, Vanguard had $585.4 billion in TDF assets, followed by Fidelity at $338.2 billion and American Funds at $248 billion. T. Rowe Price ($160.1 billion) and TIAA ($81.5 billion) round out the top five.

About 59% of 401(k) plan participants are invested in some form of TDF, according to the latest research from the Investment Company Institute.

Products July 19, 2023

Allianz Finds Growing Interest in Annuities in Employer-Sponsored Retirement Plans

Meanwhile, Nationwide announces a new lifetime income annuity.

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According to a recent study conducted by Allianz Life Insurance Co. of North America, there is growing interest from participants in including annuities as part of employer-sponsored retirement plans, such as 401(k)s.

Over the past few years, interest in annuities has increased significantly, Allianz found. The study revealed that nearly 68% of respondents expressed a desire for more information about incorporating annuities into their retirement plans, up from 62% in 2022 and 56% in 2021. Furthermore, 67% of participants stated they would consider adding an annuity to their plan if it were available, compared to 60% in 2022 and 59% in 2021.

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“Americans are eager to have their plan sponsors add a guaranteed lifetime income option such as an annuity as part of their employer-sponsored retirement plan,” Matt Gray, head of employer markets at Allianz Life, said in a statement. “In today’s economic environment, adding an annuity to a portfolio can help mitigate risks to a retirement strategy and improve outcomes.”

Growing Interest

The growing interest in annuities comes as Americans increasingly depend on employer-sponsored defined contribution retirement plans to secure their retirement, according to Allianz.

More than three-quarters (77%) of respondents indicated that having an option to establish a protected foundation for lifelong income would enhance their loyalty to their employer, compared to 74% in 2022 and 65% in 2021.

Additionally, 72% of Americans anticipate that a significant portion of their retirement income will come from their employer-sponsored plans. Meanwhile, 66% of respondents are concerned about depleting their retirement funds during their post-employment years.

New Offering

On Wednesday, Nationwide Mutual Insurance Co. furthered its commitment to annuities with a new lifetime income annuity, Nationwide Defender Annuity, which offers customized growth potential and investment protection. This marks Nationwide’s second product offering in what it calls a “rapidly growing” sector, though not an in-retirement plan option. Registered index-linked annuity sales have surged from $1.9 billion in 2014 to exceed $41 billion in 2022, according to the firm.

The new annuity allows investors to tailor their strategy with a term of one, three or six years to fit their investment goals. It features five different index investment options offering upside potential and customization to fit a broad range of investment objectives.

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