Insight

Building on real estate

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The investments offered in defined contribution plans, and the options participants select, are often focused on traditional asset classes – particularly US equities — despite the wide availability of alternative investment options available in a DC-friendly format that historically have proven beneficial in both lowering portfolio risk exposures and limiting the range of potential participant outcomes 

Real estate offerings were available in only 18.9% of large DC plans and represented a miniscule 0.4% of overall industry DC assets, according to the 2019 Plan Sponsor Council of America 62nd Annual Survey.

Real estate assets remain a strategic part of so many institutional portfolios. Backed by physical commercial or residential properties, these securities offer the potential for capital appreciation as the value of their underlying assets grow, historically providing both attractive growth opportunities and an effective inflation hedge. They also have the ability to generate steady, predictable income. Strategy choice has also expanded, where plan sponsors can now select from direct and public (REIT) real estate investment solutions.

To learn more about the potential benefits of offering direct or public real estate investment solutions in your plan, download our Summer 2020 edition of Shifting DC Times to read the Building on Real Estate article.

Shifting DC Times

Read our bi-annual publication that provides the latest DC thinking across four essential plan components, with ideas you can turn into action.