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- October 1, 2015: Vol. 27, Number 9

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Target acquired: As the target-date fund grows in popularity, real estate is finding its place in the mix

by Steve Bergsman

Since the Pension Protection Act of 2006 was signed into law, the growth of target-date funds has been staggering. But that has led to lagging modernization in the funds’ asset mix of stocks, bonds, cash equivalents and other investments — particularly the “other” category, which increasingly includes real estate.

At the end of June 2014, approximately $678 billion was invested in target-date mutual funds, reports Washington, D.C.–based Investment Company Institute. More important, adds the institute, net cash flows into target-date funds have grown significantly; target-date mutual funds received $53 billion in net new cash flow during 2013, compared with $22 billion in 2005 and $4 billion in 2002.

In addition, Boston-based Cerulli Associates reports target-date funds will continue to grab a greater share of 401(k) assets, capturing 88 percent of new contributions to the plans and representing 35 percent of total 401(k) assets by the end of 2019.

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