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Near-Retirement Target-Date Investors Show Signs of Stress

Investors within 15 years of retirement pulled more than $9 billion in March.

Key Takeaways

  • Investors in target-date mutual funds that are close to retirement pulled a net $9.4 billion in March as the coronavirus drawdown accelerated during the month. Investors further from retirement stayed the course.
  • The net outflows from 2020 target-date funds equaled roughly 4% of assets. That’s a much faster rate than the redemption of 2015 target-date funds in the first quarter of 2015.
  • Total assets in target-date mutual funds shrunk by 15% in the first quarter to approximately $1.17 trillion, down from $1.37 trillion at the end of 2019.
  • Organic growth, which measures the growth of assets caused by inflows and outflows, sank to about 0% for the quarter, down from 2% in the first quarter of 2019.
  • Vanguard, which has roughly 38% of the market share in target-date mutual funds, had the most outflows in March, with a net $3.1 billion pulled from its series. The 2020, 2025, and 2030 vintages had the largest outflows.

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