Target-maturity funds returned 5.3% on average for the quarter and more than 9% for the 12-month period, driven by the strong performance of U.S. equities. For the quarter and 12-month period, only 25% of target-maturity funds outperformed their Morningstar Lifetime Moderate indexes.
Flows into target-maturity funds in the quarter topped $23 billion, breaking the previous record of $16 billion in first quarter 2011. As of the end of first quarter, total assets in target-maturity funds were estimated to be $518 billion, a 21% increase from one year ago.
During the past two years Morningstar has provided glide path stability scores (GPSS) for some of the largest retail target-date fund providers. The GPSS metric was born from a white paper that looks at how much target-date fund series’ glide paths shift over time. The term “glide path” in this context refers to the level of equity of each target-date fund series. This year, the three series with the most stable glide paths since inception include T. Rowe Price, Vantagepoint, and MFS.
Some notable fund families that experienced elevated scores since inception (i.e., higher level of glide path instability) include American Century (moved down eight ranks from a year ago) and Fidelity’s Advisor series (moved down 10 ranks from a year ago).The full report is here.