Name: 2026 Trends in Target Date Funds: Structural Change and Innovation
Uploaded: 2026-03-05T20:30:03.889Z
Duration: 1 h 37 s
Description: 2026 Trends in Target Date Funds: Structural Change and Innovation

Transcript for "2026 Trends in Target Date Funds: Structural Change and Innovation": Good morning. Good afternoon, everyone. We are still having some people join us, so we're gonna give them a a minute or two before we, get started. Thank you. Alright. Looks like we have a packed house, so we're gonna go ahead and and get rolling here. Again, good morning. Good afternoon. Welcome to the the webinar today, which is titled 2026 trends in target date funds, structural change and innovation. Kellen Foley with Great Gray. I'm joined by Brandon Shea with T. Rowe Price. Very happy to, partner with TRO on this webinar, and and thank you again for coming on. Just a few housekeeping items, before we dive in. Within the webinar console here at at Goldcast, you will find the presentation slides, that we're that we're sharing. We will also have a dedicated q and a session at the end. So you will see the q and a box on your screen. So please use that to submit questions. You can do so at any time, and we'll we'll hopefully be able to get to most, if not all, the questions there at the end of the presentation. You'll also notice the docs tab next to the q and a. We have some additional educational resources there that are available, including the white paper that informed, this presentation and some information on subscribing to Great Gray newsletter. And then lastly, we do encourage your feedback. So if you, have, you know, some feedback regarding this session or even suggestions maybe for some future topics you'd like us to cover, please complete the survey that we'll show you following the q and a segment, at the end of the webinar today. So thank you again for the participation, and we look forward to providing some valuable insights during today's program. So without further delay, just a little bit of background on myself. I am senior vice president here at at Great Gray Trust Company. I came over to Great Grey in November with the acquisition of FlexPath CIT business. I spent the majority of my career, there at FlexPath, twelve years or so, really helping build FlexPath from an idea to over a 100,000,000,000 in AUM. And most of that time was spent on custom target date funds that incorporate a lot of the trends we'll be covering today. So I really hope to bring some real world, you know, practical insights and and, you know, experience from working with advisers and plan sponsors over the last ten plus years on on these items. And as I mentioned, I'm very lucky to be joined by Brandon Shay from T. Rowe Price, and I'll let Brandon introduce himself. Thank you, Kellen, and hi, everybody. I appreciate you spending time with us this afternoon. And I want to say thank you to Greg Gray's team and also T. Rowe Price's team. They put a lot of work into this deck, and we want to just really deliver actual insights today. Again, my name is Brandon Shea. I'm a DC strategist with T. Rowe Price on our global retirement strategy team. A lot of my work involves translating DC industry trends into actual insights and especially as Target A funds have continued to play a central role for participant outcomes. Of the past twenty five years, the last two decades, we've really been focused on the DCIO and intermediary space. And just really excited to share what we're seeing in the glide path evolution, participant behavior and the next wave of innovation that we're gonna continue to see this year. Yeah. Thanks, Brandon. And here's our agenda for you today. So we'll start with kinda where we are with the target date fund market. The four key trends that we'll focus on are personalization, lifetime income, blended strategies, and private markets. And then we'll hit the adviser implications of these trends as well as the q and a. And to Brandon's point, the adviser implications are really the focus here. So we'll also hit on these kinda throughout, as we talk about the different trends. You know, we understand, you are all likely very well versed on what these topics are, what these trends are. So the focus today is really how you can evaluate these items and and incorporate them into your your practice. So as I mentioned, let's start with where we are today. And I think, as someone much smarter than me once said, you can't really know where you're going until you know where you have been. And, I think the evolution of the default is fascinating in our industry. So this chart, takes you back to 2004, and this is looking at plans on Vanguard's record keeping platform. Vanguard actually launched their target date fund in 2003. So if you look at that green line, target date funds are are basically no plans using target date funds as the default in 2004. And, cash equivalents, so money market or stable value really dominated over 60% of plans using that as the default, which is ironic given that today, you know, those strategies don't even qualify for a QDIA. Right? You know? So so very interesting to see how that has changed over time. You see balanced funds, gaining in popularity and peaking kinda in that 2007, 2008 range. You have risk based funds not included in this chart, but I remember when I first joined the industry, those static risk based portfolios were very popular, as an alternative to target date funds. And then, of course, target date funds, you see the hockey stick growth starting in about 2006 with the passage of that the, Pension Protection Act, which designated target date funds as a QDIA. And by 2004, over 90% of Vanguard record cap plans used the target date fund as the default. So when I look at this, right, you know, you see this evolution. Target date funds clearly dominate. But, you know, if I were a betting man, I'd say it's not the end all be all, and we're looking at probably continued evolution in this space. And, you know, whether that's, target date fund two point o or whether that's a completely different vehicle, I think it's gonna be more target date fund two point o incorporating some of these these trends that we'll be discussing today. And, Brandon, I know you had some comments speaking of the dominance that target date funds have enjoyed. Yeah. I I think the main comment is that it's good to see that. And and and it's it's it's providing millions of participants with age appropriate equity exposure. And more importantly, it's it's helping investors stay the course during bouts of volatility. So as as people know, T. Rowe Price is an asset manager, but we also have a record keeping arm. We have 3,200,000 participants on that. So we track that data on what participants do during bouts of volatility. And the most recent, kind of study we did was q two of last year when, if if a lot of people remember when, Trump came on in on April 1 and said Liberation Day with the tariffs, which caused a lot of volatility. When we see that participants have the bulk of their assets, if not 100% in target dates, they tend to stay the course. And so 98% of the participants stayed the course during q two last year, and that's indicative the same of when we look back in March 2020 with COVID and great financial crisis. So the main point I wanna say is that participants are staying involved, and invested during market swings in a professionally managed diversified portfolio. So to see that, movement towards target dates is a good thing. Yeah. I agree. And, you know, 5,000,000,000,000 in target date fund assets now is incredible. We also see a subtrend, within the target date fund space towards CIT vehicles, which you see noted on the the left hand side of this slide. Twenty twenty four, in particular, was a milestone year where assets in CIT target date fund vehicles actually surpassed mutual funds, for the first time, now representing, 54% of target date fund assets as of the 2025. So that trend is is continued. That's in terms of assets. The the tilt towards CITs is actually even greater when you look at the number of target date fund series. So CITs dominate with over 70% of target date fund series now being structured as CITs. So, for our audience advisers, you know, understanding the CIT landscape, which you know, has been primarily driven by lower cost, but also now, you know, innovative new solutions, I think has really become essential to serving plans effectively. You know, if you're not looking at CITs, you're effectively ignoring three quarters of the available universe, of options. Kellen, So let's make a quick comment here. yeah, Just from. T. Rowe Price perspective, we're we're above industry trend in terms of CIT assets and target dates. So we're at you know, more than 61% of our targeted assets are in CITs. About five years ago, that was about 45% just to show how quickly that that trend has been moving. Wow. Yeah. That's incredible. So let's start with our first trend, which is, something near and dear to my heart, which is personalization. And I always like to start with why, which when it comes to personalization, I think is pretty intuitive. You know, target date funds only personalize by age. And, you know, most of the time, within a plan, people differ in many ways beyond their age, of course. An analogy I like to bring up is, you know, buying a suit. And and I remember going back now over seven years, when I was getting married and, buying my first I would you know, splurging on my first custom suit, and I still remember how good I felt and how how nicely it fit. You know, buying a suit, right, you know, the the analogy would be, you know, imagine you only get to pick, like, your jacket size. Right? Forty two. That's like your age. Right? It's probably the most important factor, but, certainly, it ignores all those other measurements that are very important for a well fitting suit. You know, the length, the collar, the sleeve length, the, you know, pant size, and inseam. You know, it goes on and on and on. So when it looks at a target date fund and you only look at age, it's ignoring very important factors like savings rate, for example. And this chart actually shows, as an example, two participants that are the same age, have the same starting balance of 10,000, have the same salary of 60,000 that grows at the same rate over time. So these people are identical in every single way except for their savings rate. And we have a high saver saving 12% of their salary and a low saver saving 5% of their salary. And in the chart, you can see that the high saver has, you know, very successful plan for retirement. And at age 65, they're projected to have a 96% replacement ratio. So their emphasis can be much more on a stable glide path that pervert preserves what they've diligently saved away, whereas the low saver, you know, in the absence of contributing more, needs to emphasize growth in order to have a chance of really having a successful retirement. Right? So just an example of how two participants that are seemingly very similar and just savings rates alone can have a big difference in the types of allocations that these participants should really have. And, of course, in reality, participants differ in many ways beyond just their age and savings rates, and prudent asset allocation is a function of both the participants' need to take risk and their willingness to take risk, you know, two dimensions that traditional age only target date funds don't fully capture. So, you know, when you're looking at a plan and you have a plan with diverse participant bases and, you know, those variances and factors like account balance, wage volatility, savings rates, you know, that creates what we call misfit risk, or the risk that, you know, an asset allocation, like a target date fund glide path, while it may fit the average participant, is, you know, genuinely inappropriate for potential meaningful segment of of the plan's population. We also see that there really is demand for personalized solutions by both participants and plan sponsors. This is a study coming from both Invesco and PGIM, citing that 93% of participants are interested in personalized solutions within their retirement plan, and 92% of plan sponsors would consider a personalized asset allocation to be important or very important. And then you look at, and this was shocking to me. Participants and plan sponsors are actually willing to pay more for this. So on the participant side, 76% would pay more. Now, admittedly, 50% said yes, but it depends. But 26% said yes, absolutely. And, of course, that depends on on the fee structure. Plan sponsors were a little bit more fee sensitive. No surprise there. But still, 70% of, plan sponsors said that they'd be interested in a personalized solution if costs were 10 basis points or less. If costs were 25 basis points or more, that interest, dropped dramatically to just 8%. So, you know, the takeaway here is I think there's demand. They're willing to pay more to a point. Right? And you have to have that that sweet spot. And I think that makes sense. Right? Going back to custom suits, I think a lot of people are willing to pay a little bit more for a suit that fits them really well. But, of course, you know, you're you're half constraints there. And then you look? at the different. types of of target date funds. And, yeah, Brandon, I know you had some talking points here. So so please. You're you're making me, go all the way back to high school. In my mind, it's the last time I had a '42 jacket, so you're making me feel I'm living a little large right now. I need to I need to lose some pounds. But I I do wanna kinda share if you can go back one slide, please. I I think there's some really good context that comes from our annual DC consultant study as we track perspective on on on the growing interest and personalization. And, you know, in the in that study, we saw 63% of the plan sponsors let me let me pause for a moment. We had 36 adviser consultant firms that that have 9,000,000,000,000 in in assets. So it's about 70% of the market. We had feedback from plan sponsors, small, mid, large, mega market, and we also had participant feedback. So it was a really good three sixty perspective on the survey. And when it comes to plan sponsors, we saw 63% of sponsors were open to or open to hearing about more personalized strategies as participants approach retirement. But I think the key points when it comes to personalization are closer to retirement, at what cost, as you mentioned, and also at the participants' discretion. So one of the biggest insights from the DC consultant study last year was how advisers, consultants, and sponsors were viewing personalization. If it was put into a QDIA and defaulted into it, the score, one out of four, four being the most, preferred and one being the least preferred, it was pretty low. It was, 1.2. So it was a pretty low, score that we got from the feedback. But if you do it as an opt in option, that's when it was one of the highest scores in the whole survey. So our feedback from participants and plan sponsors are there there is that growing interest in personalization, but they wanna make it at their discretion. And so I just I wanted to share that. At at as they get older, at what cost? And, also, discretion is a big part of it. Makes sense. to you. And, you know, when you speak to you know, on target date funds, you know, we can kinda segment the universe into three different types of personalized solutions. So you have risk based glide path, which the image is showing you here. So, like, an aggressive, a moderate, and a conservative instead of just having a single glide path. You also have technology enabled solutions. A lot of record keepers have announced capabilities, in this regard where, you know, you use record keeper data like, you know, age, balance, savings rate, income to create an individualized glide path. And then, of course, you have the custom glide path route. This isn't necessarily at the participant level, but, you know, a large plan sponsor that has a unique plan design or demographics may work directly with an asset manager to do a custom glide path, you know, based off that plan specific demographics. And then an area, of course, that we haven't hit on that is also gaining some traction is managed accounts and how that can interact with target date funds. And I'll let Brandon expand upon that. Yeah. Thank you, Kellen. Key idea that you're looking at right here is that, you know, traditional target dates, the approach is great. It has a great starting point. And and we can map participants based on, you know, their age into a vintage and allows them to be on the same glide path. But as participants move closer to retirement, that one size glide path can miss differences in readiness and risk capacity. So that's one reason why T. Rowe Price created our personalized retirement manager on a record keeping side. It's also known as PRM for short. So it's a dynamic QDIA, and it's you know, as participants begin in an age based target date fund, at some point, once they meet a a sponsored defined criteria, often around the age of late forties or 50 when personalization begins to even matter even more, they can be defaulted into PRM with an opt out window. So something like this there there are other solutions out there in the industry, but something like this with PRM that uses recordkeeping data, like balance, contribution, rate, salary, but it can also incorporate additional participant inputs such as retirement goals, household assets. And what results is a very unique and adjustable glide path that continues to update over time. So the more a participant engages, the more tailored that glide path becomes and really helps them align to, their specific retirement outcome, not not just their age. Also, on the next slide, on the on the topic of managed accounts that you just mentioned, Kellen, this is something that we've been tracking again going back to the 2025 DC consultant study at T. Rowe Price. This is a signal, of momentum towards integrated personalization as participants approach retirement. It's it's really that continued growth, and focus on managed accounts in the DC space. So as you can see right there, there's been a lot of healthy growth. You you've seen managed account AUM go from about 343,000,000,000 in 2019 up to about 545,000,000,000 at the 2024. That's a healthy compounded annual growth rate of about, you know, 9.7%. But I think it's important to contrast that to target dates. Target dates had a CAGR of about 11 and a half percent over that same time frame. And, Kellen, as you mentioned, you're talking about a $5,000,000,000,000, base in the DC space. So I think I think what's interesting in the survey too with managed accounts is there was a dichotomy between responses if if professionals identified as an adviser or a consultant. If you ask me what's the difference between a retirement adviser or retirement consultant, typically, those who identified as an adviser work in the small, middle, and even large plan size, but they also have private wealth. Those who identified as consultants tended to really manage or have a deeper focus on retirement plan management and governance and work in the upper and large market space. But what's interesting is when it comes to managed accounts and personalization, the advisers, those who also have the private wealth, leaned heavier into this, where close to 83% of advisers, part of this survey, offered up a proprietary or firm branded managed account compared to only about a quarter of consultants. So it's fascinating to see, depending on where somebody's practice is kinda shares or kinda give illuminates their philosophy towards personalization here. Again, also, I think one thing that was interesting from the survey is advisers view personalized, managed accounts as a retirement income vehicle or one potential solution to that. Yep. Let let me pause and hand it back to you if there's any other thoughts or comments for what I just said. Yeah. I think to conclude, you know, our first trend, you know, let's focus on some practical takeaways for for advisers, and you'll see us frame it this way for all the trends. So obligation, opportunity, and then how to and I think from from our perspective, the obligation here is, you know, apply the DOL guidance that came out from 2013, to evaluate custom target date fund approaches as part of a prudent process. You know, that, of course, doesn't mean you have to use a custom target date fund, but you can check the box, and there's a lot of good solutions out there that that are available now. And I think the opportunity is, you know, you can move from a more what we call commoditized comparison of, you know, fees and performance to something that's really differentiated and and outcome focused. And from personal experience, I can tell you this can be very effective in winning new business, you know, telling a different story than, you know, what most of your peers are out there, focusing on when it comes to the target date fund space. And then as far as how to do this, this this fits very neatly into a suitability type analysis, which, again, the DOL, really wants, you know, all plans to conduct a suitability analysis when they're selecting target dates. And we have an example here, you know, classic bubble chart where you see kind of where participants should be invested based off their information. And you can very, you know, easily see and even quantify how well a single glide path option, right, you know, fits a particular plan fact set versus a more personalized option may fit that that base. And, again, I'll bring in another analogy. This time, I'll I'll I'll focus on shoes. So imagine you do a suitability analysis and, you know, the the average shoe size is a size ten. And then you do this misfit risk analysis, and the range is, you know, size nine to size eleven. Right? Well, that size ten, the average, does a pretty good job of fitting the whole plan. So it's not gonna add much value to do do anything beyond that. But if the range is, you know, size seven to fourteen, well, that, you know, size ten shoe doesn't really adequately fit the population. Right? And that's the type of analysis you can do here as part of your suitability and very easily quantify the value that these solutions may or may not provide. Alright. Let's move on to our second trend, which is lifetime income. This is one that I think, you know, has certainly, you know, gained a lot of attention in the industry. And I think it's fair to say it's moved from concept to category now with over 100,000,000,000 in in assets. And I think, you know, the president and CEO of TIA had a really interesting quote, and I'll paraphrase. You know, you're not responding to a trend. You're you're standing at the precipice of a paradigm shift. And I think, you know, TIA specifically is 70,000,000,000 of that a 100,000,000,000. So, you know, they're, I think, at the forefront of this. And, you know, to be fair, on platform at TIA, I think, you know, in the higher ed space, income is more culturally prevalent there than maybe it has been in the DC space. But notwithstanding, I think this is a rapidly scaling segment, and advisers, really do need to be prepared to evaluate these products, not wait when adoption becomes mainstream because then, of course, you're playing catch up. Yeah. I think that's a t TIA was in the news last week for their thousandth client on on income. So we you're starting to see more and more headlines that of of adoption there. What you're seeing here is, again, insight from last year's survey that really tracks how DC plan clients are moving across the stages of considering in plan retirement income solutions. And what we're comparing here is what were the viewpoints in 2020 I'm sorry, 2021 to 2025. And the trend shows progress, the gradual progress. So if you can look at that box, in the middle that's boxed in red right there, you know, there there are a couple insights I wanna I wanna share. So there's movement away from no view at all with retirement income. So in in 2021, nearly 60% of DC plan clients had no view whatsoever on retirement income. However, by 2025, the figure dropped to 15%, as you can see in the box there. This signals that to us, retirement income is no longer a future concept. It's it's really becoming an active part of plan sponsor discussions. Also, if you see in the bottom left hand corner of the slide, there's growing sponsor motivation. So in our separate plan sponsor research we did last year, 59% said their motivation is to help participants convert savings into a paycheck like stream. So that aligns with participants' needs, and is driving a shift from passive awareness to exploration and, in some cases, even implementation. And finally, the third point on this slide is, the market is still evolving pretty slowly. So while the number of plans considering and offering solutions is rising, implementation curve remains pretty gradual. And so I you know, if I if I'm looking at that as a DC strategist, I think that reflects fiduciary caution and operational complexity that's typical with any innovation that we're seeing in our space. Let me go to the next slide here. I think oh, I'm sorry about that, Kellen. I think we advanced just one. There. we go. Got. it. There we go. Perfect. I thought this was probably one of the, of the handful of insights that really bubbled up to saying, okay. I'm seeing a difference year over year in our 2025 survey last year is we asked consultants and advisers and plan sponsors, which in that red column to the right are plan sponsors. We asked them to rank the different retirement income solutions from one to four. Again, one being least favorable, four being most favorable in terms of how they view the various options in the marketplace. And what you'll see is that while the average scores differ slightly, the order was the same across the groups from advisers and consultants and plan sponsors. And I found this fascinating that it was a simple systematic withdrawal. SWIPS rated the highest. That was the only solution we saw that ranked north of three. So if three is is good, I think this reinforces that sponsors and participants still value ease and repeatability above a lot of other things. And another thing that this tells me is that there's no silver bullet in the retirement income solution space. So if using the analogy, Kellen, I I love the suit. I love the shoe. I I feel like we're at a county fair, like, shooting a water gun and watching the horse race going left to right. All these retirement income solutions are are are fighting for adoption. You can see between two and two point seven here, you know, there's solutions that link retirement income to defaults like target date funds, with embedded annuity features or manage accounts with income planning that don't have annuities. But it is worth worth. noting that in our our conversations with consultants last year, embedded annuities still face challenges. So participants have to opt in at retirement. Fees can vary. Actual annuitization rates may may, you know, be pretty low. But on the practical side, in addition to seeing, what you just said on a previous couple slides in terms of adoption, even on T. Rowe Price recordkeeping, process, we have more than $54,000,000,000 in assets already offering managed payout solutions. So if there's a takeaway, it's SWIPs are still leading. They remain the baseline, the systematic simple withdrawals, but there is growing interest in target date and managed account based income solutions to integrate more seamlessly into participant defaults. Yeah. And I think, you know, that gap that you mentioned is really, you know, our opportunity to add, you know, value, right, and actually help plan sponsors implement what they're saying they wanna implement. But there's considerations, of course, that need to come along with that. So, you know, evaluating the guaranteed income component, assessing the implementation complexity, analyzing the cross cost structures. Right? Things like, you know, portability limitations, record keeping complexities. How do you communicate to participants? You know, how does the income component play into the overall glide path and impact the risk return profile, right? So these are the complexities that you're talking about. But I know T. Rowe Price has developed a really nice framework to help advisors with this. Yes. Two of my colleagues, Jessica Scalfani, global retirement strategist on my team, and also Bert Kui, he's a a senior quant analyst, created something called the five dimensional framework. We call it the five d as a simple way to evaluate retirement income and really kind of view the way that retirees actually experience it. Because it's not just risk and return. As you can see on the slide, there are five dimensions that we really look at. So longevity, risk hedge. The question I think about that is, will income last no matter how long I live? When you look at unexpected balance depletion, what's the risk if I run out of money early due to markets or spending shocks? Payment level, big is the paycheck gonna be in retirement, balance, liquidity, how much, excess do I have for emergencies, health cost, legacy goals if I'm working with a planner, and payment volatility. You know, how stable is this paycheck gonna be year to year? I think the most important thing or point to draw from this is that you can't maximize all five at any given time, and every income solution is a set of trade offs. So this is a helpful framework to think about because if you strengthen guarantees and and longevity protection, you're probably gonna give up on liquidity and upside payment level. If you target for a higher paycheck today, you'll probably accept more depletion risk and variability. If you prioritize liquidity and flexibility, you're probably gonna give up some degree of guaranteed lifetime income. So I think the main thing here is, you know, make sure any income solution that you you choose, it's suitability driven. So you you do that by understanding the plan demographics, objectives, identify which of these five dimensions matter the most, and select the select approach that that it's the best fit. And then, you know, just be transparent about the the trade offs you're making and document that and always have a strong DEC, you know, documentation process, education process, communication process with your participants. Thanks, Brandon. I think that framework is really helpful for advisers to, you know, evaluate these options in in the context of suitability. Let's jump to our third trend, which is blended strategies and something that we like to call the blend gap. So, according to Cowen, 34% of plans use blended target date funds, and yet 86% of plans offer both active and passive options within their core menu. Right? So why why that divergence? And I think we all know the answer. Right? There's been a huge shift towards indexed target date funds for a number of reasons. And I think we you know, in the shift from active to passive, we we skip right over blend. And I think, you know, blend target dates offer some really nice advantages that plan sponsors are deprioritizing for the sake of fees. And we know that the IRSA standard is clear. Right? You don't have to select the lowest cost target date fund, but a target date fund that is reasonably expected to maximize risk adjusted returns after fees and fits the plan population. I think blend strategies are well positioned to do just that, and have a lot of value to be had. Yeah. And and if you know, as a solutions provider at TiVo, we have multiple different strategies, but we're seeing continued growth end of the blend. And we asked last year in the survey, consultants, advisers, and and plan sponsors, tell us about your approach to active and passive across asset classes. So what you see in this chart, everything in the blue represents a preference for active only strategies. Teal green is blend of active and passive. Black on the far right is passive only. So if there's a clear takeaway here that it's not a binary either or choice, that's why we named the slide, you know, active passive as a false choice, We're seeing that depending on what asset classes you're looking at, we'll have a strong determination on whether they want active or passive. So if you look at the, you know, the first section of private assets, there's strong preference for active management and private equity and credit and real estate because access and expertise really matters. In the equity portion in the middle, the story is more balanced. Emerging markets are split evenly. Large and small cap US equities lean towards both active and passive, so it reflects a demand for flexibility. And then when you look at fixed income at the bottom of the slide, categories like stable value, bank loans, high yields still skew heavily towards the active side of the house, especially after 2022 when we had equity and fixed income markets down double digits. So it it really kinda shows that plan sponsors are really aware of the risk of going only passive and fixed income during downturns. So, ultimately, we we see plan sponsors really wanting to combine the both, the both you know, the best of both worlds using active for downside protection and value add and also leveraging passive for cost efficiency and litigation defense. So just, you know, invoking, ERISA, they require fees to be evaluated in context of value delivered, not just lowest cost. So I think that's always important to pair that. And if I were to just, you know, sum this up to one sentence, again, I think there's a there's a strong trend and desire for a blended approach, intentionally combining the strengths of both active and passive. And a subtrend that we're seeing within this blend space, you mentioned stable value, is comanufactured target date funds. So 54% of new target date funds launched since 2018 are comanufactured, and these products now represent over 86,000,000,000 in assets. So certainly something we've seen grow tremendously. And for advisers, I I think these solutions represent a really interesting opportunity because it expands the number of target date fund options and managers at your disposal while maintaining your ability to offer the most competitive record keeping costs to clients. You know, in the past, you know, a lot of times, to get the best record keeping fees, it was a fully proprietary target date, which could be very reasonable, but it, you know, forced your hand, to to really just one option. And now those options are expanding to to many different providers, which is a really positive development. So, we'll go through this very quickly. I understand everyone here probably knows what this is, but a co manufactured target date is essentially when multiple parties, like a target date fund manager and a record keeper, join forces to create a a custom target date that typically mirrors nears the parent target date fund and existing, you know, glide path and building blocks, but then replaces a portion of the bond allocation with stable value. And then it's only offered to those record keeping, clients. And I think there are some misconceptions, on on some of these that are interesting to go through. And I think, you know, looking at this, we hit it before. Right? There's, no nothing in IRSA that says you must select the lowest cost target date fund. Of course, you know, you have to select investments that are appropriate, on a risk adjusted return, fees, etcetera, all all encompassing. And then, of course, you know, co manufactured target date funds aren't necessarily there just to primarily serve record keeping economic interest. Of course, you know, the record keeping part of it is a factor, and, you know, lower record keeping fees should be evaluated if if if offered. But comanufactured target date funds certainly can, and should, when you're evaluating them, stand on their own merits in terms of their risk adjusted return. And and, you know, you should evaluate that first, and then the the record keeping credits are really the the cherry on top. And then, my favorite here, innovation increases fiduciary liability. And, of course, that's only true if you're not properly evaluating and documenting your your process when you when you go through these options. And I wanted very briefly to go through kind of the the risk return benefits of of these options. So why why include a stable value in a target date fund at all? And I think, you know, when it comes down to it, it's really, you know, the option to offer a low volatility solution that hedges interest rate risk and helps secure assets for participants as they approach retirement while maintaining growth exposure for younger participants. And that's really the true spirit of a glide path to begin with, right, derisking participants as they approach retirement, and this certainly does that. And you can see in the top part of this chart, the the dark blue line being stable value, the light, you know, blue or green line, representing, you know, the ag index. So bonds, of course, are less volatile than equities, but stable value offers essentially zero volatility, to help really add that balance to the portfolio. And then, of course, you know, what we hear many times is true, but, you know, when equities turn negative, that's when bonds really shine as a safe haven asset. And and that has been true, in the past, and I think is true when the shocks are demand driven. But it's not necessarily true when the shocks are supply side driven, such as inflation, and we saw that in 2022. We're seeing it again, right now, as as yields have risen with the the war in Iran. So when you look at this on the bottom side of the the slide, you see correlations between equities and fixed income are actually, very positive, at the moment and have been for the past five years, whereas correlations between equities and stable value are quite low, negative to to flat, most of of that same time period. So also offering more of a diversification benefit currently as well as the the low volatility. But co manufactured target date funds come in different forms. Not all of them have a direct allocation to to stable value. Some of them actually equitize that exposure as well. So, again, it's important to do your due diligence on these and and understand those those differences. And, of course, you know, I'd say from an obligation perspective, just don't dismiss, you know, blended strategies or comanufactured strategies, based off some of these structural, you know, fee biases or preconceived biases on some of these solutions. But, Brandon, I'll let you expand on that. Yes. We've just I'll just say we've had a lot of robust and multiple conversations with recordkeeping partners out there. I wanna say, I was speaking to our marketing department. I think we have nine different varieties of comanufactured products out there. Most of those are blended strategies. And, definitely, there's a lot of innovation and complexity with these. So just echoing what Kellen said, doing your due diligence. These are not the same target dates that were around four, five, six years ago. Definitely worth, you know, making sure you truly understand it from a fiduciary perspective. Thank you. And speaking of blended strategies, we're very excited. T Rowe Price is a partner tech partner of RPAG and among other great initiatives together, that allows T. Rowe Price to offer an exclusive share class of of some of their strategies to RPAG advisers. And we've actually had the active target date funds with T. Rowe Price for three plus years, and that has been tremendously successful. And we're very excited, given the trend towards blend, to now offer, again, exclusive to our PAG advisers, the T. Rowe Price blend target date funds at 18.5 basis points. To put that into perspective, that's equivalent to the $500,000,000 minimum investment pricing, that a plan would, you know, typically need to invest in order to get access to that price point. But if you're part of RPAG, your clients can access this at 18 and a half basis points with no minimum investment, which I think is very exciting. So these are ready. If you're part of RPAG, you can use these. If you're not currently part of RPAG and are interested in learning more, please let us know. You can always check out the, rpag.com website as well for for more information. But thank you, T. Rowe Price, for the sponsor or for the, for the partnership, and we're, very much looking forward to, you know, this this solution together. Yeah. And, Caitlin, if I can just say these are this is for plans that that are that for advisers and consultants where they're serving as a three thirty eight or three twenty one. You get the exact same portfolio team glide path process as our retirement blend, flagship series. So, really, it's just a thoughtful blend of active and passive for performance and efficiency. And if you wanna learn more, please reach out to your great, great team member or T. Rowe Price DCIO recordkeeping wholesaler to learn more. Thank you. Alright. Our last trend of the day, and we'll go through this fairly quickly to to make sure we leave time for for questions at the end. But, certainly, a topic that probably is getting the most buzz right now and I think for for good reason, and and the main catalyst I see here is the the shrinking public equity markets and the the, you know, realization that public markets may not deliver the type of of performance that they have previously. Just to give you some small examples, you know, there were over 8,000 publicly listed US companies in 1996. There's half of that today, and these aren't just small companies. 81% of companies with annual revenues over $100,000,000 are privately held. DC participants don't have access to that type of growth, right? You don't see companies going public as a small cap and then mid cap and then large cap. These companies are IPO ing as larger or mega cap names. And I heard something the other day I thought was good. You own Starbucks in your portfolio and your four zero one k plan, but you don't own Dunkin'. Right? And and I think, you know, those, you know, obviously well established organizations So looking at, some of this, you know, your DC plans, you know, maybe missing out. BlackRock estimates that it could be up to 50 basis points annualized in terms of the, in, you know, excess performance, which could equate to about 15% more in in retirement savings over a over a forty year career. So, you know, these are meaningful, you know, potential benefits that we're we're talking about here. Yeah. And, Kellen, I I just you you set this up perfectly. I just wanna kinda really hammer home why this opportunity set is expanding. You said the investable universe has been shifting from private I'm sorry, from public to private for years. Publicly listed U. S. Companies, like you said, almost 8,000 in 1996, now just over 4,000 in 2024. Also, on the flip side, number of savings and loans in commercial banks has really consolidated from about 18,000 in 1984 to just over just around 4,500 in 2024. So the takeaway is there's a growing share of economic growth and lending and infrastructure financing that's happening outside of the traditional public markets. And at the same time, private markets have scaled meaningfully. As you can see on the slide right here, private markets have grown by 618% over the last fifteen years. That's three x as fast as public assets, and growth of private equity, private debt, infrastructure, real estate. So an important question for targeted investors is as the opportunity set is broader, can we thoughtfully access it to potentially improve outcomes? And from T. Rowe Price perspective, there are four really guideposts if you see on the slide right there. Number one is a bigger opportunity set can make, can really give you a a more diversified source of return. Secondly, professionally managed multi asset solutions, and I think this is so key, like a target date. It's the right chassis that can absorb complexity and actively manage liquidity and apply governance. Three is private assets really bring a different return driver and volatility path that can really help risk adjusted returns. And four, private assets really need to earn their place. Most most most situations where you're gonna bring in private assets might incur a a cost differential. So from T. Rowe Price, we're really looking for true net of fee benefits and diversification that can really help, with risk adjusted outcomes and potentially sequence of, returns risk. So main thing, if I'm just boiling it down to a sentence, the market has moved. The opportunity set has expanded. Sponsors are actively evaluating how to access it, starting with private credit. We're also seeing differentiation from plan sponsors. Those who have under 1,000,000,000 in plans are more likely to anticipate implementing private equity in crypto. With plans over 1,000,000,000, those plan sponsors anticipate implementing direct real estate, aligning to larger plan government resources and also operational scale. So we think that, you know, private credit might come in first, but we're gonna see a widening, base on you know, determined by plan size, governance, and liquidity tolerance. Yeah. I think those are the structural innovations that we've seen that have really allowed this to happen now. Right? So, you know, being daily liquid versus, you know, the lockup periods that you typically see with private equities, the evergreen strategies that eliminate the j curve effect, right, and also help with liquidity. And then, of course, the the delivery and the target date fund vehicle, to your point, that has professional management. It's age appropriate, diversified across private equity managers, fiduciaries that are selecting the private equity managers. So it's not all on the the plan sponsor. So, you know, limited adoption to date with about 5% of plans, but 22%, looking to add. So certainly something we continue to to expect to see, in the marketplace. And how to to do this, right, the obligation, the opportunity, the how to, I think it's important that advisers develop the capability of evaluating private markets. Something that I think is really interesting is the difference in a top quartile and a median active manager in the public markets might be 100 to 200 basis points annualized. It could be a thousand basis points or more in the private space. So your capability, to identify skillful managers is even more important in in the private market space. And that's just one example. We have the the checklist here of all the other things that, of course, you wanna you wanna fit into the the analysis. And I think private markets doesn't doesn't fit as neatly into, like, a suitability framework, but I think there is some some opportunity there. And, certainly, some demographics will will lend themselves more to to a private market's target date fund than than others. So to conclude our, prepared comments, we did wanna go through, again, just some of the high level adviser implement implications of of all four trends. And to really go through this, I think that the key takeaway is it's important for advisers to develop the evaluation capabilities in all these areas. And, you know, those advisers that don't and rely on the traditional methods of just, you know, risk return or or at risk of being left behind, you know, as it comes to, you know, evaluating these these different options. And, you know, when I look at this, you know, they some of these seem newer, but it continues with, like, the DB of the the DC world. So you look at these trends, you know, personalization. Well, pension plans are personalized at the plan level with a LDI type glide path, right, based off that particular plan's funded status. You have pension plans very much offering a a mix of active and passive and including an allocation to private markets. And then, of course, at the end of the day, that that results in a lifetime income stream for for the for the participant. So these are not new investing concepts by any means. They've been used in the institutional space, where, you know, every day participants are the end beneficiary of these solutions. It's just a matter of incorporating them into the DC space. And I think as a result of that, it's it's inevitable that it'll it'll continue. I will say while we see the demand on the plan sponsor side, I think like anything else, it's going to be adviser led and and driven. And I think back, when I first got into the industry, auto enrollment, was still up and coming. And I, spent some time on the advisory side, and and I don't think there was a single client that was banging down our door for auto enrollment. Right? We thought it was a good idea. As an industry advisers brought that to clients and and recommended it and said, we think this is a positive development. And, of course, you know, they they listen to our expertise, and I think it it's gonna be the same situation with with these trends that you're seeing here. So to conclude, if we had to boil it down to really three questions or framework, that you can do with any of these, it's does this fit our participant demographics? Do the benefits justify the costs and complexity? And lastly, can we document our process? And, for advisers, you know, I think going through this, you'll be in a very good position, but it's also a very worthwhile exercise. You'll go through this, and I think, you know, some or many plans will, you know, come to the conclusion that a traditional indexed target date fund is is a good fit. But I think for many, you know, it it won't be a good fit, and and these trends can really add value. But either way, conducting the analysis is a worthwhile exercise. And, also, I think, you know, I don't have to tell anyone on this call, the retirement plan business continues to consolidate, and differentiation through genuine expertise has never been more valuable, than it is today. So with that, I know we have a few extra minutes here. We'd love to to dive into the, the q and a portion. So I'm looking through the the questions now. There's, one question that came in around, target date fund glide pass and, how they are, through retirement or to retirement and how many participants take their money out at retirement. How do you reconcile that behavior, you know, given the sequence of returns risk? And that's a great question. I think it goes back to the suitability analysis. So there's a lot of different tools and things you can use in the industry as it relates to suitability, but, we think about it in terms of glide path risk level, not just two versus through. So regardless of whether participants are taking their money out or not, you know, what risk level is appropriate to your point, for them to have at that exposure. And I think it all comes back, in my opinion, to funded status. So, you know, more well funded participants can afford to derisk, whereas, you know, participants that not aren't as well funded, may need to take more risk. So that's how we think about it from a from a suitability, perspective. And, Kellen, I'd say that, we're seeing a trend of plan sponsors wanting to keep assets on, on the plan for longer. Even after they retire, it gives them institutional access to CIT pricing and so forth. So if assets are staying on the books, we think when it's incumbent upon target date managers to manage appropriately through retirement. Thank you. We got a question on what are the expense ratios for the RPAG members for the CITs? And again, that's 18.5 basis points for the T. Rowe Price blend target dates. No minimum investment, 03/21 or March. We had a question. Does adding a stable value choice into a target date fund reduce liquidity for our participants? Great question. The short answer is no. Those are are liquid stable value strategies, so they're daily liquid participants. So no issues there. We got a question. Thoughts on DC entities planning to incorporate private equity structured vehicles into their, target date or target risk funds? Brandon, do you want to take a shot at that one? I'm looking at can you restate that question, please? Sure. Yeah. Thoughts on defined contribution entities planning to incorporate private equity structures into their their target date funds? Yes. I I think there's gonna be a lot coming to market now and over the next twelve or eighteen months. As we talk to consultants around the country and and other solutions come in the market, private equity is or I'm sorry. Private credit is very attractive. From a liquidity standpoint, despite what we saw in the news recently about Blue Owl having a liquidity mismatch in the marketplace. We've as I said earlier, I think target dates are great chassis, so you can manage liquidity there. But I definitely see new strategies coming to market over the next year or two that will have some kind of differentiated approach or diversified approach with private equity, private credit, and potentially infrastructure. And maybe you you could take this one too. What is in it for the fund company to allow their target date fund to be comanufactured, you know, versus obviously just, you know, offering the the off the shelf? Yeah. I I think that's just the strength of relationship with a record keeper, that if you have a very strong relationship, oftentimes, it's a win win scenario if we can create something that is also has the strength of that team behind us. And sometimes we can do something very creative. I I don't wanna mention all the other comanufactured solutions we have because I'll probably forget a record keeper. But some requests are saying, hey. It it would behoove us or be economically helpful if we can, use a stable value, and then it allows us to think in a very creative way. One example, as I mentioned, I think earlier, is that we have we've incorporated a client's stable value into an equity sleeve, and it kicks off cash that we use futures to create almost like an S and P 500 synthetic return. So we're able to use something like that in a very creative way. In turn, it allows some concession fee concessions to be offered. And I think it's a, you know, it's it's a very innovative, unique win win scenario that's offered to the marketplace and really strengthen our relationship with that record keeper. We had a question on, you know, can you expand on your suitability comments related to, you know, private equity and then also on, lifetime income? And I think from a suitability perspective, it's it's much more well suited to handle, you know, the trend of, you know, the the personalization, whether that's a good fit or not, income, whether that's a good fit or not. And with income, specifically, I think, just at a very high level, plans that, have a frozen pension, right, where they're looking to continue that benefit. We've seen a lot of success there. Plans that have union, participant bases where they're trying to offer nonunion, employees competitive benefits, to compete. And and and, frankly, those tend to be larger plans. So I think it's a great opportunity for advisers to swim upstream, offering their expertise in evaluating those options for those particular plans. I think we got to all the questions or most of the questions. It looks like there's a few more. So we'll make sure to, reach out to those of you whose questions we did not get to. So so you'll you'll make sure to get your question answered. But on behalf of T. Rowe Price, thank you again very much for joining today's webinar. Hopefully, you found it useful and and had some practical takeaways on these four trends of how you can incorporate them, into your practice, how to evaluate these solutions. If you do have any follow-up, please reach out to myself or Brandon or or any of your great, great, or T. Rowe Price representatives. And and thank you again for for the partnership, and have a great rest of your day. Thank you.