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Investing December 29, 2016
Why Use Certain DC Investment Options?
An analysis of potential investment options in a plan sponsor's line-up and when and why to use them, or not.
Reported by Judy Faust Hartnett
Each defined contribution (DC) retirement plan is unique. Therefore, each plan menu needs to reflect that. Different types of investments are suitable for different plan demographics, size and assets. The articles cited below may assist you in customizing your plan for participant success.
DC Plan Multi-Asset Funds
Multi-asset funds have been around forever but newer funds reflect the industry’s move to bring the sophistication of defined benefit (DB) investments to the DC world.
Custom TDFs Offer More Control
Plan sponsors are injecting more of their own judgment by creating custom TDFs for their particular preferences regarding plan structure, investment and costs.
White Labels: Simplifying the Investment Challenge
The
concept is simple: A plan sponsor through its custodian establishes an
investment option, granting it a particular name. Within that white
label wrapper, the sponsor can insert vehicles such as mutual funds,
collective trusts (CTA) or separate accounts, investing in one or
several asset classes and having management provided by one or more
investment firms.
DC Equity—Active vs. Passive
In choosing an equity philosophy, a plan sponsor faces three questions: Can active managers outperform the equity markets net of fees? Are there particular managers that beat their benchmarks consistently? How can a sponsor know all of this in advance?