TDF Assets Continue Climb Through July

Target-date funds, that time-tested method for retirement saving accumulation, are showing no signs of slowing down so far this year: Total assets for the savings vehicles hit a record $1.856 trillion among top providers tracked by data provider Simfund through the end of July.

TDF assets grew steadily each month from April through July among the largest 25 providers, as driven primarily by market growth and inflows from passively invested vehicles, according to Simfund. The market data provider, like PLANADVISER, is owned by ISS STOXX.

When tracking the 10 firms with the largest inflows, passively managed funds brought in a total of about $420 billion for the year to date through July, as compared with net outflows for actively managed funds of $42 billion.

The leaderboard, as measured by flow, reflected that passive versus active mix, with firms BlackRock and Vanguard, known for passive strategies, at the top, and firms known for active management, the Capital Group (which owns American Funds) and T. Rowe Price, at the bottom.

Those providers, as ranked by inflows through July, were:

Source: ISS MI Simfund

American Funds and T. Rowe Price still maintain strong positions when looking at total TDF assets held at the end of July. Among the largest providers, leaders by total assets are Vanguard, Fidelity Investments, American Funds and T. Rowe Price, according to Simfund.

Michael Cangnina, a senior vice president and managing director for SEI Investment Co.’s institutional business, has also seen continued growth in the total TDF space, according to a defined-contribution-investment-only assessment sent via email. That includes a mix of passive and active strategies, and “an increasing number of plan sponsors are adopting all-passive target-date series, while others integrate active management selectively,” he says.

At SEI, Cangnina notes, the firm takes a blended approach with plan sponsor clients, using active management in “less efficient market segments” and in areas where indices are difficult to replicate. In all cases, plan fiduciaries still must balance the cost for reward of strategies, he said.

“In this context, governance and cost-efficiency are key considerations, as plan sponsors must navigate the trade-offs between active management’s potential for outperformance and the typically lower fees associated with passive strategies,” says Cangnina.

Simfund’s dataset, which dates back to 1990, hit its previous highest TDF asset peak in 2021 at $1.765 trillion.