DC participants to increase equities, fixed income investments

Declining as percentage of DC plan portfolios are investments in alternatives, such as commodities, REITs and emerging market funds (18 percent in 2016 versus 27 percent in 2014); and “other” investments (8 percent in 2016 versus 19 percent in 2014).

The research does not observe, however, a comparable rise in allocations of equities and fixed income assets among investor types. In fact, these asset classes decline in some cases as a percentage of the portfolio mix:

Corporation pensions

• 39 percent equities in 2016 vs. 44 percent equities in 2014;
• 40 percent fixed income in 2016 vs. 37 percent fixed income in 2014.

Retail intermediaries

• 51 percent equities in 2016 vs. 52 percent equities in 2014;
• 23 percent fixed income in 2016 vs. 23 percent fixed income in 2014.

Nonprofits

• 49 percent equities in 2016 vs. 50 percent equities in 2014;
• 20 percent fixed income in 2016 vs. 20 percent fixed income in 2014.

Other institutional investors

• 36 percent equities in 2016 vs. 37 percent equities in 2014;
• 41 percent fixed income in 2016 vs. 41 percent fixed income in 2014.

In respect to retail intermediary gatekeepers, the report indicates that these entities “expect more static portfolio allocations over the next three years, although they anticipate further reductions in cash positions built by cautious investors. Additionally, they expect the rising age of their investor base to favor more fixed income strategies.”