According to a summary of Index highlights, while the
typical 2030 target-date fund has 83% in equities, the equity allocation of the
Callan DC Index is 62% as of September 30, 2009. The DC Index is compared to 2030
target-date funds because such funds would be the most appropriate target-date
funds given the age of the typical DC participant, Callan explained.
Its lower relative equity allocation throughout the
market collapse allowed the DC Index to outperform the average 2030 target date
fund, but now it is causing it to underperform as the market recovers.
However, the tide is changing as participants venture
back into equity allocations. Callan said third quarter transfer activity was
almost an inversion of what was experienced a year ago when poor market
conditions resulted in sizeable flows into stable value and money market funds
and out of riskier funds. With market conditions greatly improved, participant transfers
were positive for every public diversified equity asset class except domestic
large cap equity.
Turnover was above average for the DC Index at 1.13% of
assets for the quarter.
Flows into target-date funds have been positive every
quarter since the start of the DC Index, according to the summary. Target date
funds are now offered by 69% of DC plans in the Index. When offered, they account
for 18.52% of assets. As a percent of total DC assets, target date funds
account for 9.5%, according to the Callan DC Index.
The DC Index also underperformed the average corporate DB
plan last quarter, and has underperformed by nearly 2% annually since the DC
Index’s inception at the beginning of 2006.