The cost to invest in target-date funds fell again in 2016, a fact that analysts at Morningstar said should come as no surprise.

The average asset-weighted expense ratio for a TDF was 71 basis points, down marginally from 2015. But when considered in a longer context, price compression on the favored qualified default investment alternative (QDIA) in 401(k) plans is nothing short of remarkable. Just five years ago, the average TDF expense ratio was 100 basis points.

The continued trend is the result of a confluence of familiar factors that have been impacting the asset management industry. Competition in the TDF space is fierce, and all indications are that that will not change.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.