Vanguard reclaims top target-date fund manager spot, leapfrogs Fidelity and BlackRock

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Vanguard Group captured the most new investor money in its target-date funds last year relative to other asset managers, reclaiming the top spot it'd held for over a decade before being dethroned in 2020, according to a new Morningstar report.

Target-date funds, or TDFs, have become popular in 401(k) and other workplace retirement plans over the last decade and a half. Investors select a fund whose date best approximates their likely year of retirement; the fund gets more conservative as investors near retirement age, shifting from stocks to bonds.

Many employers use the funds as a de facto investment for employees who are automatically enrolled in a 401(k) plan.

TDFs raked in $170 billion of new contributions in 2021, an annual record, according to Morningstar. Total fund assets approached $3.3 trillion, up almost 20% from 2020.

Investors have been shifting toward lower-cost funds for years. Vanguard, which has branded itself as a low-cost provider, and other popular TDF managers have capitalized on the trend.

Retirement savers invested a net $55 billion in Vanguard's Target Retirement funds in 2021 — almost a third of all the money that flowed into TDFs, according to Morningstar.

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Fidelity Investments' Freedom Index funds, the firm's most popular flavor of TDFs, pulled in $45 billion, ranking second. (The total was a smaller $35 billion across all Fidelity's target funds, because investors withdrew money from its flagship Fidelity Freedom series, according to Morningstar.)