Study Informs DC Plan Fiduciaries of Trends, Outcomes of Private Real Estate Allocation

The Defined Contribution Alternatives Association on Wednesday published a new research paper, which examines defined contribution plan investments, specifically private real estate as an allocation within multi-asset investment options.

The nonprofit group’s research paper, “Considering Private Real Estate as a Foundation of DC Plan Multi-Asset Investment Options,” is intended to inform plan fiduciaries and industry stakeholders about private real estate DC plan investment outcomes and trends, according to a DCALTA press release.

“Including private real estate and other alternative assets in 401(k) plans has been happening for 20+ years in the United States,” stated Jonathan Epstein, DCALTA’s founder and president, in the release. “DCALTA’s research on outcomes and trends indicates private real estate has contributed to the diversification and protection of participant account balances.”

The paper found:

• DC plan allocations to private real estate have contributed to the diversification of investment outcomes and the protection of participant account balances in target-date funds, including during recent periods of stress in the public stock and bond markets;
• Private real estate portfolios have evolved to reflect the changing mix of real estate opportunities;
• Demand by plan fiduciaries has led the investment management industry to expand the solutions available in the market for target-date-fund series that include allocations to private real estate; and
• Liquidity was managed within TDFs that included private real estate, and participants continued their commitment to those target-date fund investments.

The research paper is available here.