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Considering Private Real Estate as a Foundation of DC Plan Multi-Asset Investment Options

Trends in DC Plan Investments for U.S. Plan Sponsors and Industry Stakeholders

"Throughout my career, I’ve overseen a range of institutional asset strategies, including pension funds, endowments, and private portfolios. In each of these situations, we implemented a diversified portfolio of alternative asset strategies to capitalize on diversification benefits and total return potential.

 

In the early stages of my career at MissionSquare Retirement, I recognized that our clients and their defined contribution plans lacked the means to leverage the unique characteristics offered by alternatives within a diversified portfolio.Over time, we converted our fund platform to Collective Investment Trusts vehicles, providing us the opportunity to establish a dedicated sleeve of diversified alternative strategies within our MissionSquare Retirement Target Funds.

 

We've created a vehicle that enables us to capture the diversification benefits and return characteristics of these strategies, all while adhering to the liquidity requirements of a traditional defined contribution offering. Today,investors in our target date funds can indirectly participate in a diversified portfolio of private equity, private debt, and real asset strategies."

—Wayne A. Wicker, CFA and SVP & Chief Investment Officer at MissionSquare

"BlackRock believes Defined Contribution plans should be provided the same tools and investment options as are available to their Defined Benefit counterparts, as adjusted for the unique attributes of the DC ecosystem, including the introduction of private market alternatives into Target Date Funds where the net of fee investment case makes sense.”

Robert Crothers
Head of Product & Strategy, Retirement Group at BlackRock

“We added private markets investments to our TDFs with the goal of improving performance and diversification. Our state has a longstanding and successful defined benefit private markets program, which includes private equity, real estate, and tangible assets. We saw clear benefits in incorporating these asset classes into our custom TDFs to help generate appropriate risk-adjusted growth for each participant age group.”

Tracy Guerin
Executive Director, Department of Retirement Systems – State of Washington

“We believe that incorporating an allocation to private markets can help bring the diversification and risk efficiency characteristics of sophisticated institutional portfolios to individual participants. Since the launch of our flagship target date funds in 2005, an allocation to core private real estate has been a hallmark of our approach. Since then, the diversifying and volatility dampening qualities of real estate have helped us deliver a smoother ride for our participants, across multiple market cycles.”

Daniel Oldroyd
Portfolio Manager and Head of Target Date Fund Strategies at JPMorgan Asset Management

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