Target-date strategies are integral to many Americans’ retirement savings, typically serving as the default investment option in their defined-contribution plan.
In 2021, target-date strategies had net inflows of $170 billion, more than double the year before, pushing assets managed to a record $3.3 trillion, according to a blog post published Wednesday by Morningstar.
The research showed that although net contributions into target-date mutual funds recovered from their 2020 dip, most of the new money went into collective investment trusts. In 2021, net inflows to CITs outpaced mutual funds $146 billion to $24 billion.
CITs now comprise 45% of assets in target-date strategies, Morningstar said, noting that if this trend continues, CITs will overtake mutual funds as the most popular target-date vehicle within a few years.
See the gallery for 15 target-date mutual funds assigned top ratings for the cheapest share class by Morningstar.