Report Examines Growth of Investment Options in DC Plans

December 2, 2011 (PLANSPONSOR.com) –Record-setting levels of defined contribution assets will continue to grow, yet mutual funds will not be the sole beneficiary. 

Celent, a financial research and consulting firm, examines the current retirement landscape in the U.S. in its report, “Developments in the Defined Contribution Market: New Funds and New Investment Vehicles in the U.S. Market.”

By the end of 2010, private defined contribution (DC) plans represented $4.5 trillion dollars in assets and a record high 25.8% of U.S. retirement assets (excluding Social Security). Celent says the marketplace can be categorized in several ways: by plan type (401ks, Keoghs etc.), by fund type (hybrid, target risk, target date) and by investment vehicle (separate accounts, mutual funds, collective investment trusts). The report highlights major changes for each of these categorizations.

Historically, mutual funds have been the investment vehicle of choice in the DC market, with over 50% of assets held in mutual funds. However, over the past decade, new investment vehicles have continued to gain exposure in the DC market. These vehicles include: separate accounts, collective investment trusts, variable annuities and company stock. The report outlines the evolution and growth of these investment vehicles.