Fact-Based Trends from Cogent Reports™
Competition for target date funds in the DC market is showing no sign of abating. DC Specialists (producers managing $50M+ in DC AUM) are looking outside the two dominant target date fund providers—American Funds and Vanguard. While American Funds and Vanguard continue to square off for the greatest proportion of target-date-fund dollars among this elite plan advisor segment (34% versus 33%), three investment managers are gaining ground. One in five DC specialists is likely to endorse Fidelity (23%), BlackRock (21%) and T. Rowe Price (21%) for sponsor consideration, compared with a respective 15%, 17% and 14% reported one year ago.
Among this elite group of producers, target date fund provider selection primarily hinges on fee structure, followed by performance, risk-adjusted returns and risk management/downside protection. Diversification across asset classes and glidepath also play an influential role.
This increased competition is a welcome sign for challenger brands, as DC specialists often serve as harbingers of trends to come. The fact that these elite advisors are expanding their recommendation set signals an opportunity for asset managers to grow their target-date-fund presence among other DC advisor segments.
For more information on DC specialists and all retirement plan advisors, review an overview of the Retirement Plan Advisor Trend™ report.