June 27, 2012
--- Plan sponsors should be adding more fixed-income
choices to their investment menus, according to a study. ---
on Investing: Fixed Income Options Within DC Plans,” a study from Prudential’s
investment-only defined contribution (IODC) unit, contends that today’s
equity-heavy investment menus in defined contribution (DC) plans may not be up
to the task of helping participants build and protect an asset base that will
generate retirement income.
way to help participants have a successful retirement is strengthening the
lineup of fixed-income offerings in the menu, Prudential’s study said.
to the nonprofit Plan Sponsor Council of America, the average DC plan has 18
offerings in its investment menu, but only two or three are fixed-income funds.
According to Prudential’s report, about 56% of funds offered in DC plan menus
are equity funds, followed by balanced funds (20%) and fixed-income funds
(12%). The most common fixed-income offerings are domestic bond funds.
a need to enhance the fixed-income awareness,” Mike Rosenberg, head of
Prudential’s IODC unit, told PLANADVISER. “Make sure the
fixed-income buckets are not forgotten, because they do play a really important
survey of plan sponsors found that fewer than 30% of plans offer high-yield
bond funds or global bond funds as stand-alone menu options. However, more than
50% of sponsors said they would consider these asset classes appropriate as
stand-alone menu options.