was cited as a key benefit of alternative investments in general, but plan
sponsors remain somewhat confused about the definition of alternative
investments, possibly skewing the pace of adoption, the council found in a
survey of plan sponsors and consultants.
council’s goal is to promote the inclusion of investments in direct commercial
real estate and real estate securities in DC plans. Its members include
Deutsche Asset & Wealth Management, Goldman Sachs, Prudential Real Estate
Investors and TIAA-CREF, among others.
of DC retirement plans see continued growth in the adoption of alternative
investments in plan offerings. Low correlation was seen as the primary benefit of
alternatives. Lower volatility, high risk/adjusted returns and inflation
protection were ranked lower in importance, and income was viewed as least
important. Operational issues, including valuation and daily liquidity, remain
an obstacle for some alternatives.
respondents had real estate in their plans in some form, with plan sponsors and
consultants generally considering real estate one of the more straightforward
of alternative investments. Still, some plan sponsors and consultants showed
reluctance to include real estate as an asset class among their core offerings
because of slower adoption rates and perceived liquidity issues, especially
with direct real estate.