DCREC SURVEY: DEFINED CONTRIBUTION PLAN SPONSORS SEE FURTHER APPLICATION OF REAL ESTATE AND OTHER “ALTERNATIVES” IN DC PLANS
Diversification cited as key benefit but confusion remains around what constitutes an “alternative investment”, potentially slowing the pace of adoption
Surveyed plan sponsors and institutional consultants represent more than $14 trillion in assets
NEW YORK, (June 10, 2014) – Sponsors of defined contribution (DC) retirement plans see continued growth in the adoption of alternative investments in plan offerings, with real estate viewed as a fundamental asset class and an attractive avenue to portfolio diversification, according to the results of a new survey released today by the Defined Contribution Real Estate Council (DCREC).
These findings are based on in-depth interviews conducted with 401(k) plan sponsors, plan consultants, and target date fund managers that collectively represent more than $14 trillion in assets under management or advisement. While the majority of those queried expressed support for including alternative investments in DC plans, there remained some confusion as to just what constituted an “alternative,” the survey found.
“Real estate was valued for its ability to add diversification, with inflation protection and income viewed as significant but less important attributes,” said David Skinner, co-president of the Defined Contribution Real Estate Council. “At the same time, the survey also indicated that some debate remains as to how to define alternatives, including real estate, which may be slowing their inclusion in plans.”
Other findings from the survey include:
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