CITs, Retirement Income Features Gain Traction in $5.3T TDF Market

On this day 20 years ago, Congress passed the Pension Protection Act of 2006, ushering in a new era for defined contribution plans. By introducing qualified default investment alternatives, automatic enrollment and automatic escalation, the landmark bill turbocharged the growth of target-date solutions, which became the QDIA of choice for most DC plans.

Twenty years later, a new era for TDFs has dawned, according to Sway Research LLC’s latest mid-year report. Assets in U.S. mutual fund and collective investment trust target-date series grew 11% in the first half of 2026, reaching $5.3 trillion. Since the end of 2022, the last time target-date asset levels declined, assets have increased by 88%, averaging annualized gains of 20%.

As target-date assets swell, they also become more attractive to participants looking to decumulate, customize and diversify into new markets, according to Sway’s report.

CITs continue to make their name in the TDF market after surpassing their mutual fund counterparts for the No. 1 investment vehicle with TDFs in 2024.

As of June 30, assets in CIT-based TDFs reached 55% of target-date assets, up 1 percentage point since the end of 2025, versus 45% held in mutual fund-based TDFs. At the start of the decade, CITs were the vehicle holding only 42% of target-date assets, while mutual funds held 58%. Only six mutual fund TDF series have been launched in that same time period, compared with 75 CIT series.

TDFs Geared for Generating Income

Retirement income-embedded TDFs finished June with $164 billion in assets, an 18% gain from the end of 2025.

Clear leaders of these solutions have emerged among the providers of these kinds of TDFs, Sway’s report stated. TIAA and Nuveen control 51% of income-embedded TDF assets ($84 billion), and the TIAA Secure Income Account also serves as the “income engine” in investment products from both the Empower Annuity Insurance Co. of America and Great Gray Trust Co. The TIAA SIA will also be featured in new income-focused target-date series from Vanguard and Transamerica, which are expected to launch during the second half of 2026. The Transamerica product will also feature investments from T. Rowe Price.

Two other leading target-date providers, Fidelity and Principal, have also announced plans to introduce target-date-based income offerings.

In H1 2026, BlackRock’s LifePath Paycheck ($30 billion), State Street Investment Management’s IncomeWise ($27 billion) and the AllianceBernstein L.P. Lifetime Income Strategy ($15 billion) all saw substantial growth.

The demand for retirement income features is also pushing target-date providers and insurers into partnerships—including ones intended to add private assets to TDF menus, as evidenced by State Street and Apollo Global Management’s partnership, announced last year.

“While the first half of 2026 brought strong asset growth to target-date-based income solutions, upcoming product launches featuring Vanguard, Fidelity, Transamerica with T. Rowe Price, and Principal raise the potential for explosive asset growth in the latter half of 2026 and into 2027,” said Chris Brown, Sway’s founder and principal, in a statement.

Manufacturing Models

As partnerships expand, the rise in co-manufacturing arrangements between target-date providers, DC plan administrators and trust companies has also triggered TDF introductions, the report found.

Co-manufacturing enables plan recordkeepers to manage the stable value, guaranteed income contracts or fixed-annuity allocation within the series, potentially offsetting administrative costs and thereby lowering the fees paid by plan participants.

Since the start of the decade, nearly half (48%) of the 81 target-date series introduced were co-manufactured and are exclusive to specific plan administrators. BlackRock is the leader in the new approach that incorporates proprietary target-date series. The firm is the third-largest TDF provider by assets, with $687 billion of target-date AUM, including co-manufactured target-dates, where its investment portfolios are used across 15 different TDF series offered by 9 recordkeepers.

Sway’s study of the target-date market is based on a proprietary database of mutual fund and CIT-based target-date portfolio and asset data, which included 169 target-date products with assets, as of June 30, utilizing more than 7,000 mutual fund share classes and CITs.