Are Target-Date Funds Aging Well?
Morningstar's annual study finds strong results alongside leveling growth.
Target-date series are earning their keep in 401(k) plans. A new Morningstar study out today finds that these retirement investments are getting cheaper, and post-2008 returns have been strong, reflecting broad market trends.
Those trends are consistent with a maturing segment of the fund industry. Target-date series have become fixtures in Americans' defined-contribution plans, with assets crossing the $500 billion mark in 2013's first quarter. The industry's market leaders--Vanguard, Fidelity, and T. Rowe Price--still control about three fourths of the industry's assets, despite impressive growth from some of the industry's smaller players. More new cash poured into passively managed series than actively managed series, reflecting a move in retirement savings toward indexed investments.