When it comes to fees, frankly all fees, the word we always like to hear is, decrease. So we were drawn to Lee Barney’s interesting planadviser.com piece noting that a BrightScope report on trends in target-date funds (TDFs) “showed that in 2013, fees declined, assets rose and new TDF series were introduced to the market.” Other excerpts from Barney’s article:
“BrightScope based its review by examining the lowest cost institutional share class for all TDFs, which consists of 52 TDF series made up of 479 individual funds managed by 39 asset managers.
“Fees fell to an average of 67 basis points (bps) for the lowest cost institutional share class, down from 70 bps in 2012 and 72 bps in 2011. Assets rose 24%, to $625 billion in Investment Company Act of 1940 funds. If collective investment trust (CIT) and pooled separate account TDFs were included, BrightScope estimates total assets would be closer to $900 billion.
“Management of target-date funds’ glide paths held steady last year, with equity at the starting point of TDFs averaging 41%, up from 40% the previous year. Equity at the landing point averaged 30%, consistent with the previous year. For 2014, 42% of the TDF fund families (22 of the 52 fund families) brought their glide path to its most conservative position at the target date, denoting that these funds are ‘to’ retirement rather than ‘through’ retirement.”