Target-date mutual fund sales went negative in 2020, potentially for the first time in the products’ history.
Overall, the retirement savings products bled $6.7 billion, representing the first such instance of negative net sales since Morningstar began tracking them in 1994, according to a report this week from the ratings and research firm.
However, that figure does not give a complete picture of demand for target-date products. While investors’ redemptions of target-date mutual fund were much higher last year than in recent history, for years sales have been shifting to collective investment trusts, particularly among large retirement plans, at the expense of target-date mutual funds. Over the past six years, CITs have more than doubled their market share of target-date products, according to Morningstar.