New ideas to simplify DC plan investment menus are being
touted by asset managers. Assets in standalone investment choices will remain
relatively flat as target-date funds continue to garner assets. Investment
menus will continue to evolve, opening the door for products that have had
limited success in DC plans, such as alternatives and managed accounts.
Asset managers should expect best-in-class funds based on
performance in traditional asset classes to continue to win mandates, but in
the long term, a fund’s role in an asset-allocation strategy will become more
important. Asset managers should begin thinking about how to position funds in
this new environment.
Asset managers should wait until requested to develop a
collective trust version of a strategy. However, those that need to use an
outside trust company to bring a collective trust to market should explore
their options and develop a relationship in order to speed up time to market, should
the need for a collective trust arise.
The report also indicates that consultants are the primary
source of information for plan sponsors. Only 12% of plan sponsors indicate
that conferences are the initial source of defined contribution plan
information. Asset managers can more effectively reach plan sponsors through
consultant relations or directly than by speaking at conferences.