PLANSPONSOR - April/May 2018 - 12
Defined Contribution:
Four Themes
for 2018 and Beyond
In our view, the prospective low-return
environment calls for a capital-efficient approach
that pairs actively managed bonds with passive
or enhanced equities in target-date, core and
retirement-income allocations.
Richard Fulford
Executive Vice President
Head of U.S. Retirement at PIMCO
For defined contribution (DC) plan participants, wealth accumulation has depended
on both equities and fixed income. Yet fixed income will be ever more important in
2018 and beyond, in our view. Of the $7 trillion in DC assets, roughly two-thirds is held
by participants over age 50, the period when fixed income exposure peaks in portfolios.
The performance of bonds will thus be critical to seeking retirement security. We believe
the prospective low-return environment calls for a highly capital-efficient approach,
including actively managed bonds and passively managed or enhanced equities, in
target date, core and retirement income allocations.
Here are some suggestions for adapting DC menus to better serve participants in the
years ahead.
TDFs: Go active where it matters, passive where it saves
Target-date funds (TDFs) offer participants a diversified, all-in-one default solution for
potential wealth accumulation. But TDFs, which entered the scene nearly 25 years ago,
need optimization along the active-passive axis. In our view, sponsors may improve
participant outcomes and prudently manage plan expenses by employing active and
passive strategies selectively.
Today, 98% of DC plan sponsors that use TDFs have underlying strategies that are exclusively
passive or exclusively active, according to BrightScope. Only 2% of plan sponsors
use TDFs that blend active and passive approaches.
In contrast, 62% of plan sponsors blend active and passive approaches on the core menu.
12 | planadviser
SPONSORED SECTION
PLANSPONSOR - April/May 2018
Table of Contents for the Digital Edition of PLANSPONSOR - April/May 2018
2018 Plan Sponsors of the Year
Plan Administration Guide, Part 1
From Strength to Strength
Finding the Best Course
Managed Accounts
Rising Costs
Taking Responsibility
PLANSPONSOR - April/May 2018 - C1
PLANSPONSOR - April/May 2018 - FC1
PLANSPONSOR - April/May 2018 - FC2
PLANSPONSOR - April/May 2018 - C2
PLANSPONSOR - April/May 2018 - 1
PLANSPONSOR - April/May 2018 - 2
PLANSPONSOR - April/May 2018 - 3
PLANSPONSOR - April/May 2018 - 4
PLANSPONSOR - April/May 2018 - 5
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PLANSPONSOR - April/May 2018 - 7
PLANSPONSOR - April/May 2018 - 8
PLANSPONSOR - April/May 2018 - 9
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PLANSPONSOR - April/May 2018 - 11
PLANSPONSOR - April/May 2018 - 12
PLANSPONSOR - April/May 2018 - 13
PLANSPONSOR - April/May 2018 - 14
PLANSPONSOR - April/May 2018 - 15
PLANSPONSOR - April/May 2018 - 2018 Plan Sponsors of the Year
PLANSPONSOR - April/May 2018 - 17
PLANSPONSOR - April/May 2018 - 18
PLANSPONSOR - April/May 2018 - 19
PLANSPONSOR - April/May 2018 - 20
PLANSPONSOR - April/May 2018 - 21
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PLANSPONSOR - April/May 2018 - 54
PLANSPONSOR - April/May 2018 - 55
PLANSPONSOR - April/May 2018 - Plan Administration Guide, Part 1
PLANSPONSOR - April/May 2018 - 57
PLANSPONSOR - April/May 2018 - 58
PLANSPONSOR - April/May 2018 - 59
PLANSPONSOR - April/May 2018 - 60
PLANSPONSOR - April/May 2018 - 61
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PLANSPONSOR - April/May 2018 - 64
PLANSPONSOR - April/May 2018 - 65
PLANSPONSOR - April/May 2018 - 66
PLANSPONSOR - April/May 2018 - 67
PLANSPONSOR - April/May 2018 - From Strength to Strength
PLANSPONSOR - April/May 2018 - 69
PLANSPONSOR - April/May 2018 - 70
PLANSPONSOR - April/May 2018 - 71
PLANSPONSOR - April/May 2018 - 72
PLANSPONSOR - April/May 2018 - 73
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PLANSPONSOR - April/May 2018 - 75
PLANSPONSOR - April/May 2018 - 76
PLANSPONSOR - April/May 2018 - 77
PLANSPONSOR - April/May 2018 - Finding the Best Course
PLANSPONSOR - April/May 2018 - 79
PLANSPONSOR - April/May 2018 - Managed Accounts
PLANSPONSOR - April/May 2018 - 81
PLANSPONSOR - April/May 2018 - Rising Costs
PLANSPONSOR - April/May 2018 - 83
PLANSPONSOR - April/May 2018 - Taking Responsibility
PLANSPONSOR - April/May 2018 - 85
PLANSPONSOR - April/May 2018 - 86
PLANSPONSOR - April/May 2018 - 87
PLANSPONSOR - April/May 2018 - 88
PLANSPONSOR - April/May 2018 - C3
PLANSPONSOR - April/May 2018 - C4
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