Callan DC Index Shows Strong Flows to TDFs

The Callan DC Index enjoyed a strong first quarter in 2012, returning 8.7%.

More than three quarters (77%) of defined contribution flows were directed toward target-date funds during the quarter, a proportion that is greater than in any quarter since the Index’s inception.  

Callan noted that regardless of performance, target-date funds have consistently attracted participant assets. Since early 2006, target-date funds have never experienced a quarterly outflow. Over that period of time, quarterly flows into target-date funds have averaged 41%.   

After target-date funds, the asset class that has attracted the most inflows on average since 2006 has been international equities, which have averaged 9% quarterly inflows.  

Flows into target-date funds primarily came from fixed income investments during the quarter. Turnover in the DC Index was above average over the past three months at 1.33%.  

For the first time since the Index’s inception, assets in target-date funds exceed those in stable value funds (14.4% and 12.1%, respectively). Large cap domestic equity continues to hold the top spot at 24.7% of assets; however, Callan notes that while target-date funds have consistently gained inflows, domestic equity has netted an average quarterly outflow of -19.9% since the Index’s inception.