5 Insights from the 2026 Trends in Target Date Funds Webinar

Great Gray Trust Company recently hosted a webinar on the structural changes reshaping the target date fund (TDF) landscape based upon the report 2026 and Beyond: Innovation in Target Date Funds. Here’s what stood out.

1. The TDF Market Has Outgrown Simple Comparisons

At $5.2 trillion, the TDF market is no longer a “set it and forget it” category.¹ CITs have surpassed mutual funds as the dominant TDF vehicle for the first time ever, holding $2.32 trillion vs. $2.05 trillion.² As the market matures, advisors who expand their evaluation framework beyond expense ratios can uncover additional dimensions of value for participants.

2. Personalization is a Fiduciary Consideration, Not Just a Feature

As participant demographics grow more complex, plan sponsors and advisors are evaluating whether a one-size-fits-all glidepath continues to be the most appropriate fit for their population. With 93% of participants expressing interest in personalized solutions³ and 92% of plan sponsors agreeing that allocation fit matters,⁴ the conversation has expanded beyond age-based defaults — and advisors are in a strong position to lead it.

3. Lifetime Income Has Arrived — But Implementation is Lagging

Income-enabled TDF assets grew from $9 billion in 2019 to $103 billion by mid-2025.⁵ Participant demand is near-universal across all generations, yet only 2% of plan sponsors have implemented a solution.⁶ That gap is exactly where advisors add value.

4. Blended Strategies Deserve a Fair Evaluation

While 86% of DC plans offer both active and passive options on their core menu, only 34% have extended that same philosophy to their TDF lineup.⁶ That gap is worth examining. Blended strategies — combining active and passive management or integrating stable value alongside traditional fixed income — can offer differentiated risk-adjusted outcomes alongside, or as an alternative to, single-approach TDFs, depending on the plan’s participant demographics and objectives. The fiduciary standard doesn’t require the lowest-cost option; it requires the most appropriate one. Evaluate blended strategies on risk-adjusted returns net of fees, just like any other TDF.

5. Private Markets Access is an Emerging Opportunity

DC participants may be missing $35 billion in annual growth by excluding private markets,⁷ and BlackRock estimates private market exposure could add more than 15% to retirement savings over a 40-year career.⁸ Only 5% of plans currently include them, but 22% are planning to add exposure.⁹ Advisors who build evaluation capabilities now — covering manager quality, liquidity, fees, and ERISA compliance — will be well ahead of the curve.

The Bottom Line: For any TDF innovation, consider these three questions: Does it fit participant demographics? Do the benefits justify costs and complexity? Can you document your process?

Sources

1. Sway Research, State of the Target-Date Market: Year-End 2025
2. Sway Research, State of the Target-Date Market: Mid-Year 2025
3. Invesco, Spring 2025 Defined Contribution Participant Pulse Survey
4. PGIM, Improving Retirement Outcomes in Defined Contribution Plans Through Personalization, 2025
5. Sway Research, State of the Target-Date Market: Mid-Year 2025 and historical Sway reports
6. Callan Institute, 2025 Defined Contribution Trends Survey
7. Georgetown University Center for Retirement Initiatives, conducted with CEM Benchmarking
8. BlackRock Investment Institute, Private Markets in Target Date Funds, 2025
9. NAPA Advisor Research Institute and Meketa Capital, Private Markets in DC Plans Survey, May 2025