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Target-Date Strategies Will Capture 65% of 401k Contributions by 2018


BOSTON, MA, March 26, 2014 -- New research from global analytics firm Cerulli Associates, predicts that target-date strategies will capture 63.4% of 401k contributions in 2018.

"Plan sponsors, consultants, and advisors have increased focus on target-date decisions as plan assets allocated to target-date funds have increased," comments Bing Waldert, director at Cerulli. "The leaders among target-date providers have not changed during the past three years, but below the top tier, some asset managers have demonstrated the ability to grow their target-date assets."

The first quarter issue of The Cerulli Edge-Retirement Edition analyzes the growth of the target-date industry, how risk management capabilities will be essential to growth, and the emergence of alternative qualified default investment alternatives (QDIAs).

"Existing target-date managers remaining in the market must demonstrate risk management expertise," Waldert explains. "The majority of target-date managers believe that asset allocation and risk management capability will be the primary drivers of future target-date growth over the next three years."

"Target-date managers should consider tying the assumptions underlying asset allocations to the needs of a given situation," Waldert continues.

Cerulli warns that asset managers must have a strategy in place to grow marketshare of target-date assets; otherwise they risk irrelevance in the defined contribution space.

About Cerulli Associates

Headquartered in Boston with offices in London and Singapore, Cerulli Associates provides financial institutions with guidance in strategic positioning and new business development. Our analysts blend industry knowledge, original research, and data analysis to bring perspective to current market conditions and forecasts for future developments.

Cerulli's research product line includes Cerulli Reports, The Cerulli Edge series, and Cerulli Lodestar.


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