This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes mutual fund and exchange-traded fund (ETF) product trends as of August 2022, covers the rise of registered index-linked annuities (RILAs), and explores how personalization is enabling asset managers to differentiate their defined contribution (DC) investment offerings.

Highlights from this research:  

• Mutual funds (3.4%) and ETFs (3.0%) witnessed sizable asset declines during August, falling to $17.0 trillion and $6.4 trillion, respectively. ETFs gathered $44.7 billion in net flows while mutual funds suffered outflows equal to -$39.6 billion.

• Cerulli expects RILAs sales to outpace those for fixed-indexed annuity (FIAs) by a significant margin for the foreseeable future. 78% of insurers believe that in-plan annuities are poised for growth over the next three years, with 28% saying they believe sales will grow 10% or more. One of the major obstacles that remains is that, historically, there has been little overlap among the financial professionals who have distributed these products and those who service defined contribution (DC) plans. According to a 2022 Cerulli survey of DC plan asset managers, broker/dealer-based advisors are the primary influencers in DC plan investment selection for DC plans with less than $5 million in total assets (40%) as well as the $5 million to $25 million plan size market (31%). However, their influence does not extend into the mid-to-large-size plan market.

• Some asset managers are turning to personalization to differentiate their DC investment offering from competitors. 16% of target-date managers indicate it is highly likely they will offer customization at the participant level within the next 12 months, and an additional 40% say it is somewhat likely. For target-date managers to win favor from plan sponsors and consultants, they will need to keep the all-in cost below that of a managed account. Further, asset managers offering personalized investment solutions will need to prove to plan sponsors and consultants that their personalized glidepath methodology delivers more risk-appropriate asset allocations than traditional age-based glidepaths.