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CITs become preferred target-date series choice
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Target-date funds see assets climb in 2020 despite pandemic – Morningstar
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Susan Dziubinski: Hi. I m Susan Dziubinski with Morningstar. Investors have until April 15 to make an IRA contribution if they want it to count toward tax-year 2020. Should you consider a target-date fund for your IRA? Perhaps you should. Joining me today to talk about how target-date funds can work within IRAs and to share a few of his favorite target-date series is Jason Kephart. Jason is a strategist in Morningstar’s multi-asset manager research team.
Hi, Jason. Thanks for being here today.
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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.
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