Later this year, industry mainstays Oppenheimer and Goldman Sachs will both be stepping out of the target-date business as they move away and liquidate their products, including a range of low-performing retirement products.
That move, according to analysts with Morningstar, demonstrates the difficulty even significant names are having in a field so heavily dominated by major players.
Oppenheimer's Transition Target-Date series, which held $640 million in assets at the end of March 2012, will soon be blended together. That will see the Oppenheimer Transition 2030, 2040 and 2050 funds merged with Oppenheimer Active Allocation, an aggressive allocation category product that's lost an annualized 3.3 percent over the past five years.
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Oppenheimer's Transition 2015, 2020 and 2025 will merge with the similarly underperforming Oppenheimer Moderate Investor; the Transition 2010 fund will be merged into Oppenheimer Conservative Investor.
Meanwhile, pending board approval, Goldman Sachs is aiming on entirely liquidating its Retirement Strategy lineup later this year, with shares no longer available for purchase after July 27, 2012.
That series, launched in 2007, suffered from poor performance over the past three years, landing at the bottom of its respective groups.
"The firms' decisions show how difficult it is to succeed in the target-date space, where a few large players have dominated inflows," Morningstar notes. "To survive, fund companies not only have to have distinct funds with good performance but low fees, too."
By comparison, the heaviest hitters in the business – Fidelity, Vanguard and T. Rowe Price - accounted for 75 percent of the $379 billion in assets housed in target-date lineups at the end of 2011.
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