(NEW YORK), Tuesday, June 12, 2018 – In a new survey of the asset management industry, the Defined Contribution Real Estate Council (DCREC) identified eleven investment managers now offering daily valued, direct real estate products to the defined contribution (DC) marketplace.
The eleven managers currently sponsor 17 funds, with at least two new funds expected to launch this year from additional managers. Sixteen of the funds are designed to be offered within managed products like Lifecycle, Target Date, or Asset Allocation, and five are available through financial intermediaries to individuals. The funds include assets that are either held directly or through a fund-of-funds. Listed REITs are generally included in the funds, providing additional diversification and a source of liquidity.
“The asset management industry has responded well to the framework for best practices that has been established for bringing direct real estate funds to market, and there’s a growing consensus about how to address past perceived hurdles like daily valuation and liquidity,” said Jennifer Perkins, co-president of the DCREC. “At the same time, plan sponsors are increasingly interested in the role real estate can play in helping participants achieve their savings objectives through DC plans. Overall, the market continues to grow, with a healthy mix of multiple providers and product options.”
Benefits of Real Estate in DC Plans
Research conducted by DCREC has found that a real estate allocation of as little as 10 percent – drawn equally from the stock and bond sides of a retirement portfolio – can help reduce overall portfolio volatility and improve tail risk characteristics, while achieving outcomes similar to those expected from comparable portfolios without real estate. This is especially important in the later phases of accumulation and the transition to retirement, when excessive portfolio volatility may result in more trading as investors try to time the market in ways that often negatively impact returns.
The Executive Summary of the survey results is available on the DCREC website under research: http://www.dcrec.org/DC-Product-Survey. Participants included: American Realty Advisors, Bentall Kennedy, Clarion Partners, Cohen & Steers Capital Management Inc., Deutsche Asset Management, Heitman, Intercontinental Real Estate Corporation, Invesco, JP Morgan, LaSalle Investment Management, Partners Group, PGIM Real Estate, Principal Real Estate Investors, StepStone Group, TIAA, and UBS Global Real Estate – US.
About the Defined Contribution Real Estate Council (DCREC)
The Defined Contribution Real Estate Council was formed in 2012 to promote the inclusion of investments in direct commercial real estate and real estate securities, including REITs, within defined contribution plans. Its goal is to improve participant outcomes by furthering education about, advocacy for, and best practices of such investments.
Members include many of the leading providers of real estate investment products to the defined contribution marketplace.
More information can found be at www.dcrec.org
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