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Additionally, the report indicated that TDFs will experience a 14.4% asset -growth rate over the next five years (2012-2017), despite the scrutiny TDFs received during the 2008 financial crisis due to their level of equity allocations and risk exposure. According to Callan Investments Institute, nearly 70% of DC plans with a qualified default investment alternative (QDIA) option now use TDFs. Although FRC expects TDFs will experience asset growth—as investors report their confidence in the ability of TDFs to help them achieve retirement goals—it seems to be a limited market for providers. Launches of target-date series are becoming more rare; in fact, three providers have exited the TDF industry since June, LaFrance said. “With DC assets, projected by Strategic Insight, to reach $5.8 trillion by 2017—representing a 4.4% five-year CAGR (compound annual growth rate)—the recent exodus of TDF providers from the market is alarming,” LaFrance said. “However, the increased regulatory scrutiny, the fiduciary concern, and the litigation propensity of employees may be just some of the factors weighing heavily upon providers.”To learn how you can get access to this study, please call 617-399-5629 or e-mail kathy.marshall@frcnet.com.
Additionally, the report indicated that TDFs will experience a 14.4% asset -growth rate over the next five years (2012-2017), despite the scrutiny TDFs received during the 2008 financial crisis due to their level of equity allocations and risk exposure. According to Callan Investments Institute, nearly 70% of DC plans with a qualified default investment alternative (QDIA) option now use TDFs.
Although FRC expects TDFs will experience asset growth—as investors report their confidence in the ability of TDFs to help them achieve retirement goals—it seems to be a limited market for providers. Launches of target-date series are becoming more rare; in fact, three providers have exited the TDF industry since June, LaFrance said.
“With DC assets, projected by Strategic Insight, to reach $5.8 trillion by 2017—representing a 4.4% five-year CAGR (compound annual growth rate)—the recent exodus of TDF providers from the market is alarming,” LaFrance said. “However, the increased regulatory scrutiny, the fiduciary concern, and the litigation propensity of employees may be just some of the factors weighing heavily upon providers.”
To learn how you can get access to this study, please call 617-399-5629 or e-mail kathy.marshall@frcnet.com.
Corie Russelleditors@plansponsor.com