A recent survey of over 100 large defined-contribution plans reflects the popularity of target-date funds, while the adoption of managed accounts seems to have stalled. The median plan in the survey had assets of $240 million and over 5,000 participants as of year-end 2021.
TDF Utilization
- Median asset level of $728 million is up 67% over the past five years
- 97% of the plans offer target-date funds
- 95% use target-dates as the default investment option
- The amount of the plans’ assets invested in target-date funds averages 44%
- Active TDF usage dropped from 48% in 2016 to 46% in 2021
- Passive TDFs rose to 42% in 2021 from 34% in 2016
- Active/Passive blend TDFs rose from 8% in 2016 to 12% in 2021
Active/Passive Funds
- 70% of plans offer a tier of three or more index funds in their core menu
- 69% of the plans offer 10 to 14 core investments
- 15% offer more than 14 core investments
Other Investment Trends
- Adoption of managed accounts reduced to 38% of plans from 36% in 2020
- 39% of the plan’s inflation-sensitive investment option, such as TIPs or REITs
- 66% of the plans offer a stable value fund, while 53% offer a money market fund
- 99% of the plans offer a capital preservation investment option
- 1% offer an investment option that provides guaranteed income for life
- 2% offer a managed payout fund
- 50% of plans have record keepers that provide access to an out-of-plan annuity marketplace
Source: https://www.investmentnews.com/galleries/top-trends-in-401k-plans
ACR#4723685 05/22
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