DCIO Assets Expected to Grow

Defined contribution investment only (DCIO) assets climbed to $2.8 trillion as of year-end 2012, according to Strategic Insight, an Asset International company.

Strategic Insight’s latest report, “DC Market Sizing & Outlook 2013,” reveals proprietary assets, or those managed by a recordkeeper’s affiliated investment manager, represented 46% of defined contribution assets at the close of 2012.

Over the next five years, the DCIO market is anticipated to surpass $4 trillion in assets. “The growth of independent recordkeepers and loosening of proprietary fund requirements on platforms with affiliated managers lend to forecasts for DCIO market expansion,” said Bridget Bearden, research analyst and author of the report.

The market share of target-date funds within DC is expected to continue its growth trend (from 5% of all DC mutual fund assets in 2007 to 12% in 2012) as more plan sponsors turn to the strategy as a qualified default investment alternative (QDIA). Across distribution channels, target-date mutual funds are projected to grow to $1.2 trillion over the next five years, more than twice the June 2013 assets of $534 billion.


Index strategies as a percent of total DC mutual funds have steadily increased their share to 13% as of 2012, up from a 10% in 2007.  As a percent of all DC mutual funds, index strategies are anticipated to expand to nearly 17% by 2018, growing to $622 billion. Bearden noted that “cost sensitivity and perceptions of certain asset classes being commoditized are two drivers for expansion of index strategies within DC.”

“DC Market Sizing & Outlook 2013” provides DC market sizing and forecasts by plan type, plan size, and vehicle structure as well as detailed findings from PLANADVISER’s second annual DCIO Manager Survey, fielded during the second quarter of 2013. Survey findings reflect 36 participants, representing $1.5 trillion in DCIO assets as of year-end 2012.

The report also explores detailed business characteristics of DCIO firms, including manager league tables and market shares, median annual gross sales, mutual fund pricing structures, sales staffing, and breakdowns of assets by strategy, vehicle and share class.

The report is available by subscription to Strategic Insight’s DC Research Suite. For more information about subscribing contact Kathy Marshall at kmarshall@sionline.com or (617) 399-5629.