Looking at popular strategies in defined contribution plans, Principal Financial found that target-date funds, which have $500 billion in assets as of 2012 and reset asset allocations in a portfolio according to a set time frame, will “likely” grow at a compound annual growth rate of 15%.
The firm also discovered that plan participants are increasingly adopting new investment approaches to retirement, with legacy assets being fazed out. Other top strategies include balanced funds, traditional cap-weighted index funds, active equities and bonds, and target-income funds.
The report reveals that there are a number of hurdles plan participants face as investors prepare for retirement. For instance, 74% of participants are not saving enough, 70% are not saving early enough, 69% are living beyond their means, 66% are over-estimating their ability to plan and 62% are putting off a financial plan.
For more information on ETF asset flows, visit our ETF performance reports category.