Assets in TRFs outnumber those in TDFsNews added by Benefits Pro on May 27, 2014

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By Lisa Barron

While target-date funds seem to be generating most of the buzz these days, target-risk funds actually have more assets, according to a report by Morningstar subsidiary Ibbotson.

After the first quarter of this year, TRFs had an all-time high of $722 billion of assets under management, a 12 percent increase from a year ago, compared to $648 billion in AUM for TDFs.

That is despite the fact that for the first time since Q4 2012, target risk funds saw outflows of $1.5 billion in assets, mainly from conservative-oriented funds.

Ibbotson tracks 311 open-end funds and 280 insurance product funds from 83 firms. Since last quarter’s reports, six new funds were added, including one managed risk model and five target risk funds-of-ETFs.

TRF’s overall provided modest returns for the quarter, gaining 1.4 percent on average, with only nine funds ending with negative returns, Ibbotson said. Over the past twelve months, however, TRF’s on averaged gained 10.9 percent.

Gains in the first quarter were led by funds with the greatest concentration of REITs, commodities and longer duration bonds.

Ibbotson also found that the largest TRF manager is John Hancock, which has an 11 percent market share, followed by Columbia, PacLife and MetLife.

Of all TRFs, 61 percent are annuities, it said.

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