TDF Adoption in 2017

24 August 2018 | Investing


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The use of target-date funds in defined contribution plans continues to grow. In 2017, 58% of participants in U.S. Vanguard retirement plans were invested in a "professionally managed allocation"—in other words, their entire account balances were invested in a single TDF, a single target-risk or traditional balanced fund, or a managed account advisory service. Fifty-one percent of participants were invested in a single TDF in 2017—a percentage that has nearly quadrupled over the past ten years. Among new plan entrants (those entering the plan for the first time), 84% of members were invested in a single TDF. Because of the growing use of target-date options, we anticipate that more than three-quarters of members will be invested in a professionally managed option by 2022. In a new Vanguard research paper, authors Jean A. Young and John A. Lamancusa examine the factors that are driving the funds' increased use by plan sponsors and members.

Read the paper.