Callan DC Index™
Underlying fund performance, asset allocation, and cash flows of more than 130 large defined contribution plans representing approximately $500 billion in assets are tracked in the Callan DC Index.
Performance
Index Gains for Second Straight Quarter
The Callan DC Index™ gained 6.0% in 3Q25, which brought the Index’s trailing one-year return to 13.0%. The Age 45 Target Date Fund (analogous to the 2045 vintage) had a higher quarterly return (6.5%) and a higher trailing one-year return (14.2%). Over longer time horizons, the Age 45 TDF’s higher relative equity allocation has contributed to a higher annualized since-inception* return (8.2% vs. 7.7%).
*The Index was created in 2006.
Growth sources
Balances Rise Due to Investment Gains
Balances within the DC Index rose by 3.5% after a 7.8% increase in the previous quarter. Investment gains (6.0%) were the primary cause as net flows (-2.6%) detracted. The net flows figure will continue to provide a critical measure of how effectively plans retain the balances of retiring participants, who often own an outsized share of total plan assets.
Turnover
Net Transfer Activity Hits Lowest Level Ever
Turnover (i.e., net transfer activity levels within DC plans) decreased to 0.01%, its lowest level since Index inception, from the previous quarter’s 0.12%. The Index’s historical average (0.51%) remained steady.
Net cash flow analysis
U.S. Equity Falls Sharply for Fifth Straight Quarter
Automatic features and their appeal to “do-it-for-me” investors have historically resulted in target date funds (TDFs) receiving the largest net inflows in the DC Index. In 3Q25, however, turnover’s historically low level reflected minimal cross-asset-class reallocation. TDFs experienced net outflows (–37.4%), indicating that asset movement was primarily structural in nature rather than the result of participant reallocations within the Index.
Notably, within equities, investors withdrew assets from U.S. large cap equity (-35.5%) and U.S. small/mid cap equity (-13.3%), similar to the large outflows of previous quarters.
Equity allocation
Exposure Rises and Sits Above Long-Term Average
The Index’s overall allocation to equity (75.1%) rose slightly from the previous quarter’s level (74.6%). The current equity allocation continues to sit above the Index’s historical average (69.0%).
Asset allocation
U.S. Large Cap Equities Gain
U.S. large cap equity (29.6%) was the asset class with the largest percentage increase in allocation despite outflows, signaling the asset class was an outperformer. Stable value (5.1%) and target date funds (35.5%) had the largest decreases in allocation from the previous quarter.
Prevalence of asset class
Money Market Funds Fall
In the prevalence of funds table, the green bars indicate the prevalence of asset classes within DC plans, while the blue bars show the average allocation to particular asset classes when offered as an option.
The prevalence of money market funds (55.3%) fell by 3.5 percentage points. Other notable movements included a 0.6 percentage point increase in the prevalence of global equity offerings (19.7%).
Management fee data
The DC Fee Analysis chart shows the average total investment management fee by plan size, as well as the average share of plan assets allocated to active and passive options. Fees for each fund (including mutual funds, collective trusts, and separate accounts) within a plan are asset-weighted to determine the average total fee. This exhibit will be updated annually with the release of third quarter DC Index results, and this updated data should be available shortly.
Using 3Q23 data, for plans with assets less than $500 million in assets, the average asset-weighted fee decreased by 3 basis points from 3Q22. Plans with assets between $500 million and $1 billion saw the largest fee decrease of 9 bps, while the fee for plans with more than $1 billion in assets had a decrease of 4 bps. Fee decreases were largely driven by a combination of increased use of passive mandates as well as lower breakpoints and new lower fee vehicles and share classes for actively managed options.