The Defined Contribution Institutional Investment Association has issued a first-of-its-kind report about allocations in custom target-date funds (TDFs), and while plan sponsors' data is aggregated for the report, Joshua Dietch, from T. Rowe Price and a co-contributor to the research, said each plan has “unique rationales for doing what they did.”
“A big driver of the 2018 buy-out sales was a combination of mid- to large-PRT deals,” says Eugene Noble, research analyst, LIMRA Secure Retirement Institute. “We also saw two new insurance companies enter the PRT market this year.”
Fidelity finds some difference between how larger and smaller institutions plan to diversify.
Cerulli Associates points to active target-date fund (TDF) performance during market volatility and the ability to mitigate sequence of return risk for defined contribution (DC) plan participants as reasons to consider them.
While target-date funds (TDFs) are intended to automatically diversify retirement plan participants’ portfolios, Vanguard found nearly one-third mix TDFs with other investments and “are pursuing what appear to be reasonable diversification strategies.”
“Growing emphasis on financial wellness, concerns about lack of retirement income options within employer-sponsored plans, increasing customization for the participant, and fiduciary concerns could spur additional growth in managed accounts,” Cerulli contends.
Cerulli Associates found fee sensitivity and the notion that environmental, social and governance (ESG) investing entails a trade-off in performance are two broadly applicable headwinds to ESG adoption.
Mutual funds held the highest percentage of participant self-directed brokerage account (SDBA) assets, according to Charles Schwab.
Sway research finds target-date series that invest in passively managed underlying funds, as well as those that invest in collective investment trusts (CITs) have been increasing, while target-date series that invest in actively managed underlying funds saw their market share fall.
Speakers on a PGIM Fixed Income webcast offered practical steps pension plan sponsors can take today and over time to protect funding levels; they suggested liability-driven investing is a smart way to “get off the funded-status rollercoaster.”
It was the slowest start to the year in the 20-plus years of the Alight Solutions 401(k) Index.
Between nearly doubled investment returns, stable contributions and cost-effectiveness, the "2018 NCPERS Public Retirement Systems Study” shows an increase in pension funding.
“Equity exposure weighed on plan performance in the fourth quarter,” says Jason Schwarz, president, Wilshire Analytics and Wilshire Funds Management.
“Fixed income was something of a safe harbor in the fourth quarter, and Corporate ERISA plans benefited from larger allocations to bonds,” says Bill Frieske, with Northern Trust.