Burns will work from the firm’s New
York headquarters and replaces Nenette Kress, who has retired from the firm.
Burns spent almost 20 years at
Mercer where she held multiple communications practice leadership roles,
including positions as head of the Northeast Region communications group, and
head of the Chicago and New York communications groups. During her career, she
has worked with clients on all forms of human resources, benefits and
compensation communications.
According
to research released by Wilshire, a target-date fund (TDF) portfolio, including
U.S. Real Estate Investment Trusts (REITs), would produce an ending portfolio
value nearly 10% higher than a portfolio without REITs over a 35-year period
(1976 to 2010), while also reducing risk.
A
$10,000 initial portfolio using REITs would have generated $322,279 in
retirement savings over 35 years, or $28,634 more than a portfolio without
REITs. The improvement is due to REITs’ high and stable dividends, long-term
capital appreciation, inflation protection and low to moderate correlation with
other assets invested in a well-diversified portfolio.
Depending
on the number of years to retirement, optimally allocated TDFs should include
REIT allocations of nearly 9% to nearly 18%, according to Wilshire’s research.
While a number of leading TDF providers have included REIT allocations in their
funds, many of the largest TDF providers are giving up performance because they
are under-allocated to REITs.
“It’s
time for target-date funds to take a closer look at REITs,” said Cleo C. Chang,
managing director and head of investment research for Wilshire Funds
Management, who conducted the research. “They’re a triple play asset class,
providing income, capital appreciation and inflation protection.”
About the Research
According
to Wilshire, one of the unique attributes of TDFs is the periodic adjustment of
asset allocations over time, driven by the glide path, to reflect the
decreasing risk tolerance of investors as they approach and then enter their
retirement years. To evaluate the appropriate role of REITs and listed real
estate securities in the glide path asset allocations of TDFs, Wilshire constructed
two sets of portfolios utilizing both Mean Variance Optimization (MVO) and a
methodology called Surplus Optimization (SO) for different investment horizons.
According
to Wilshire, SO offers a better way to allocate assets for investors near or
already in retirement, with shorter investment horizons, greater clarity of
living expenses and life expectancy, and a lower tolerance for risk.
Using
both methodologies, Wilshire found that retirement portfolios constructed with
REITs substantially outperform those without REITs while reducing the level of
risk. The 35-year historical record (1976 to 2010) of investment performance
reveals that optimal allocations to REITs using SO range from
9% for investment horizons of five to 10 years to as much as 18% for
investment horizons of up to 40 years.
Over
the 35-year investment period, the TDF portfolio including U.S. REITs using SO
would have resulted in a portfolio value at the end of 2010 that was 9.75%
higher than that of the MVO portfolio without U.S. REITs and 5.95% higher than
that of the MVO portfolio including U.S. REITs.
The
full Wilshire research report on target-date funds is available free of charge
at www.REIT.com/TargetDate.