The Callan DC Index, which represents 90 large defined contribution plans with $150 billion in assets, rose 4.67% in the first quarter—its largest return since the end of 2013.
However, the age 45 target-date fund (TDF) rose 5.57% in the quarter. Callan says TDFs tend to outpace the index because it does not have as high an exposure to equities as TDFs. The age 45 TDF has 76% of its assets allocated to equities, whereas the index has only 69%, Callan says.
During the quarter, plan balances rose 4.74%, with the majority of that increase, 4.67%, due to the market performance and only 0.07% due to contributions.
The only equity class to see inflows during the quarter was emerging market equities, which had 1.95% of inflows.
Target-date funds took in 88 cents of every dollar that was invested in DC plans in the first quarter. TDFs now account for nearly one-third, 32%, of plan assets. The next biggest fund holding is U.S. large cap equity funds, which account for 23% of plan assets, according to Callan.
Only 0.42% of assets in DC plans were exchanged for other investments, below the 0.64% historical average.
Full details of the Callan DC Index can be viewed here.