PLANSPONSOR - December 2017/January 2018 - 32
INVESTMENT FOCUS
Alternative Assets in TDFs
I
They have compelling strengths, but are they worth the fees?
nstitutional investors dedicate significant
amounts of their portfolios to
the set of alternative assets other than
mainstream, publicly traded stocks and
bonds-direct real estate, hedge funds,
private equity, private debt and commodities-as
these exposures can bring significant
advantages in return and diversification.
According to its 2016 study,
consultant Cambridge Associates, in
Boston, found that for the 10 years ended
in June 2015, institutions with alternative
allocations above 15% brought an annual
median return advantage of 1.6% over
peers holding 5% or less.
Sponsors of defined contribution
(DC) plans would like to confer such superior
returns on their individual participants,
as would investment providers. But
major obstacles-regulations, complexity
of the assets and high fees-stand in the
way, so the adoption of alternatives for
core investment menus, or, notably, for
target-date funds (TDFs), remains sparse.
" Considering the goals of generating
wealth and retirement income, there
aren't any alternatives that don't belong, "
says David O'Meara, senior investment
consultant in the New York City office of
Willis Towers Watson. " There are alternatives
that can enhance returns and others
that diversify. Early on in the TDF glide
path, younger participants have a multidecade
investment horizon, and there is
cash going into the account that is going
to stay there for a long time. That is the
ideal situation for illiquid investments
such as private equity. "
Direct real estate, where funds own
properties outright rather than through
shares in real estate investment trusts
(REITs), has a broader appeal, O'Meara
says. " It works across risk levels in a
target-date fund, as a diversifier to equities
for those approaching retirement,
32 PLANSPONSOR.com December 2017-January 2018
Art by Samuel Berenfield
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PLANSPONSOR - December 2017/January 2018
Table of Contents for the Digital Edition of PLANSPONSOR - December 2017/January 2018
A QDIA in Transition
An Unseen Challenge
Alternative Assets in TDFs
Active or Passive Strategies
Boosting Employee Savings
Selective Mining
Future Shock
PLANSPONSOR - December 2017/January 2018 - Cover1
PLANSPONSOR - December 2017/January 2018 - Cover2
PLANSPONSOR - December 2017/January 2018 - 1
PLANSPONSOR - December 2017/January 2018 - 2
PLANSPONSOR - December 2017/January 2018 - 3
PLANSPONSOR - December 2017/January 2018 - 4
PLANSPONSOR - December 2017/January 2018 - 5
PLANSPONSOR - December 2017/January 2018 - 6
PLANSPONSOR - December 2017/January 2018 - 7
PLANSPONSOR - December 2017/January 2018 - 8
PLANSPONSOR - December 2017/January 2018 - 9
PLANSPONSOR - December 2017/January 2018 - 10
PLANSPONSOR - December 2017/January 2018 - 11
PLANSPONSOR - December 2017/January 2018 - 12
PLANSPONSOR - December 2017/January 2018 - 13
PLANSPONSOR - December 2017/January 2018 - 14
PLANSPONSOR - December 2017/January 2018 - 15
PLANSPONSOR - December 2017/January 2018 - 16
PLANSPONSOR - December 2017/January 2018 - 17
PLANSPONSOR - December 2017/January 2018 - 18
PLANSPONSOR - December 2017/January 2018 - 19
PLANSPONSOR - December 2017/January 2018 - A QDIA in Transition
PLANSPONSOR - December 2017/January 2018 - 21
PLANSPONSOR - December 2017/January 2018 - 22
PLANSPONSOR - December 2017/January 2018 - 23
PLANSPONSOR - December 2017/January 2018 - 24
PLANSPONSOR - December 2017/January 2018 - 25
PLANSPONSOR - December 2017/January 2018 - An Unseen Challenge
PLANSPONSOR - December 2017/January 2018 - 27
PLANSPONSOR - December 2017/January 2018 - 28
PLANSPONSOR - December 2017/January 2018 - 29
PLANSPONSOR - December 2017/January 2018 - 30
PLANSPONSOR - December 2017/January 2018 - 31
PLANSPONSOR - December 2017/January 2018 - Alternative Assets in TDFs
PLANSPONSOR - December 2017/January 2018 - 33
PLANSPONSOR - December 2017/January 2018 - Active or Passive Strategies
PLANSPONSOR - December 2017/January 2018 - 35
PLANSPONSOR - December 2017/January 2018 - Boosting Employee Savings
PLANSPONSOR - December 2017/January 2018 - 37
PLANSPONSOR - December 2017/January 2018 - 38
PLANSPONSOR - December 2017/January 2018 - 39
PLANSPONSOR - December 2017/January 2018 - 40
PLANSPONSOR - December 2017/January 2018 - 41
PLANSPONSOR - December 2017/January 2018 - Selective Mining
PLANSPONSOR - December 2017/January 2018 - 43
PLANSPONSOR - December 2017/January 2018 - Future Shock
PLANSPONSOR - December 2017/January 2018 - 45
PLANSPONSOR - December 2017/January 2018 - 46
PLANSPONSOR - December 2017/January 2018 - 47
PLANSPONSOR - December 2017/January 2018 - 48
PLANSPONSOR - December 2017/January 2018 - Cover3
PLANSPONSOR - December 2017/January 2018 - Cover4
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