Participants in defined contribution plans intend over the next two years to increase the proportion of their investments in equities and fixed income assets, according to a new survey.
This finding was disclosed by eVestment and Casey, Quirk & Associates in their 8th annual consultant survey, which is based on responses from more than 65 global investment consultants representing $3.7 trillion in assets under advisement. For the first time, more than 135 institutional investors, accounting for $1.6 trillion in assets under management, also responded to the survey.
The survey shows defined contribution plan participants increasing their allocation of equities to 51 percent in 2016 from 41 percent in 2014. Similarly, their investment in fixed income assets is expected to rise to 23 percent in 2016 from 14 percent this year.
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:
- 39 percent equities in 2016 vs. 44 percent equities in 2014;
- 40 percent fixed income in 2016 vs. 37 percent fixed income in 2014.
- 51 percent equities in 2016 vs. 52 percent equities in 2014;
- 23 percent fixed income in 2016 vs. 23 percent fixed income in 2014.
- 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.”