According to a Callan Associates news release, the performance of the typical DC plan was 1.63% for the quarter – underperforming relevant benchmarks, including the average corporate defined benefit plan (1.93%) and the typical 2030 target-date fund (1.92%). Active investment management reduced DC plan returns by five basis points within the quarter, while flow activity timing added two basis points, Callan said.
The Callan data showed 1.22% of Index assets shifted during the third quarter of 2007, compared to 0.49% of assets shifting during the second quarter. Balanced funds pulled in 5.5% of assets and asset allocation funds attracted 4.7% of account balances.
The 21% asset outflow from real estate funds was likely due to the subprime mortgage problems, Callan said. Large cap equities also experience an outflow of 1.8%.
However, domestic large cap equities continued to hold the highest percentage of Index assets at 28.7%. Asset allocation funds continued to grow, holding 13.6% of assets at the end of quarter three, up from 9% since the Index was begun.
Target-date funds comprise 59% of the total share of asset allocation funds, while 41% of balances in asset allocation funds were in target-risk lifecycle funds.
The Callan DC Index tracks the quarterly asset flows and performance of approximately 65 DC plans representing more than 800,000 plan participants and more than $70 billion in assets.