Morningstar Inc MORN

CHICAGO, March 28, 2023 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, today published its annual Target-Date Strategy Landscape Report, which found that in 2022 target-date strategies had $153 billion of net inflows, of which $121 billion—or 79%—went into collective investment trusts (CITs).

"Despite last year's market turbulence, target-date strategies saw considerable inflows, especially into collective investment trusts," said Megan Pacholok, senior manager research analyst at Morningstar. "To see target-date investors largely stay the course through the down market is a sign that these strategies are being used as intended—as long-term investments."

The 2023 report examines the latest trends across the target-date industry, including the target-date series that are gathering the most inflows, the ongoing adoption of CITs as plan sponsors' preferred vehicle, and the continued critical role fees play when selecting a series.

The Target-Date Strategy Landscape Report is available here. Key findings from the report include:

• Total target-date assets fell to $2.82 trillion in 2022 from its record high of $3.27 trillion in 2021. Market depreciation drove the approximate 14% drop.
• CITs are on pace to overtake mutual funds as the most popular target-date vehicle in the next two years. These vehicles account for 47% of all target-date strategy assets as of the end of 2022.
• The opportunity for environmental, social, and governance (ESG) target-date series has broadened, as the Department of Labor modified its guidance to allow ESG-focused strategies to serve as a qualified default investment option.
• Fees continue to influence target-date fund flows and investors prefer lower-cost options. The two cheapest quintiles of target-date share classes amassed $60 billion in 2022, and the three most expensive quintiles posted $28.5 billion in outflows.
• Vanguard Target Retirement collected the most net new money in 2022 when accounting for both mutual fund and CIT flows. At the end of 2022, 51% of Vanguard's target-date assets were in CITs, marking the first time it surpassed the mutual fund version in assets.
• Plan sponsors faced litigation around performance in 2022. The lawsuits compared series to a small peer group of the best performers, which could potentially lead plan sponsors into performance-chasing and premature target-date strategy swapping to potentially avoid litigation.

Morningstar today published a Fund Spy article on Morningstar.com that reviews the latest ratings for target-date fund series that Morningstar covers, available here.

Morningstar Target-Date Fund Series Reports
Morningstar Target-Date Fund Series Reports (the Reports) are designed to help individual investors, financial advisors, consultants, plan sponsors, and other interested fiduciaries make informed decisions when selecting a target-date series. The methodology for the Reports is available here. 

Morningstar Target-Date Fund Series Reports and Morningstar's Analyst Ratings for target-date series are available in Morningstar Direct^SM, the company's global investment analysis and reporting platform for financial professionals, and in Morningstar Office^SM, Morningstar® Advisor Workstation^SM, and Morningstar® Analyst Research Center^SM, the company's investment planning and research platforms for financial advisors.

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment insights in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $246 billion in assets under advisement and management as of Dec. 31, 2022. The Company operates through wholly- or majority-owned subsidiaries in 32 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

Morningstar's Manager Research Group

Morningstar's Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Morningstar's Manager Research Group produces various ratings and assessments including the Morningstar Analyst Rating and the Morningstar Quantitative Rating. The Morningstar Analyst Rating is derived from a qualitative assessment process performed by a manager research analyst, whereas the Morningstar Quantitative Rating uses a machine-learning model based on the decision-making processes of Morningstar's analysts, their past ratings decisions, and the data used to support those decisions. In both cases, the ratings are forward-looking assessments and include assumptions of future events, which may or may not occur or may differ significantly from what was assumed. The Morningstar Analyst Ratings and Morningstar Quantitative Ratings are statements of opinions, subject to change, are not to be considered as guarantees, and should not be used as the sole basis for investment decisions. This press release is for informational purposes only; references to securities should not be considered an offer or solicitation to buy or sell the securities.

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Morningstar Media Contact:

Michael Claussen, +1 312-244-8981 or newsroom@morningstar.com

 

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SOURCE Morningstar, Inc.