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White papers

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Investment Vehicle Selection in Defined Contribution Plans
Firm: MFS Investment Management
Authors: Jonathan Hubbard, CFA, and Kristen Colvin, CAIA
Overview: This paper provides an overview of the three primary types of investment vehicles used within DC plans and outlines MFS approach to investment vehicles.

Strengths and Limitations of Risk Management Tools Reconsidered
Firm: MFS Investment Management
Authors: Joseph C. Flaherty, Jr., Gabrielle Gourgey, and Sanjay Natarajan
Overview: Discusses how the global financial crisis highlighted the importance of downside risk protection within the context of manager selection and ongoing evaluation, exposing some of the weaknesses of risk management. Examines what went wrong, key points to look out for when evaluating risk-management processes of investment managers, as well as lists the important factors to look for before doing business with a firm.

Substance Over Style: An Objectives-Based Approach to DC Investing
Firm: MFS Investment Management
Authors: Jonathan Hubbard, CFA and Ravi Venkataraman, CFA
Overview: MFS suggests an alternative framework for investment-plan design, one that allows plan sponsors greater flexibility while presenting participants with a more intuitive and streamlined approach in providing for their retirement needs.

Rethinking Diversification in Defined Contribution Plans
Firm: Northern Trust
Overview: While defined contribution (DC) plans may be dominating the retirement landscape, many plans could take some advice from their defined benefit (DB) counterparts' best practices and enhance their diversification options. Traditionally, DB plans have created diversified investment programs that extended beyond asset classes typically held in DC plans, such as Treasury Inflation-Protected Securities (TIPS) and real assets like commodities and global real estate. These extended asset classes not only broaden a plans diversification, they also provide a level of inflation hedging that can help DC plan participants maintain purchasing power in retirement.

The Path Forward: Importing Winning DB Strategies into DC Plans
Firm: Northern Trust
Overview: To improve retirement outcomes for plan participants, leading defined contribution (DC) plan sponsors are importing time-tested principles used by defined benefit (DB) plans and other institutional investors. The economic and market uncertainty that exists today is motivating plan sponsors to undertake initiatives in establishing a DC framework that will provide their participants with the essential components to more successfully invest for retirement.

Globalization: A New Era for Defined Contribution Plans
Firm: OppenheimerFunds, Inc.
Authors: Kathleen Beichert, Senior Vice President, Retirement Marketing, and Brian Levitt, Senior Economist
Overview: The importance of a global perspective in asset allocation cannot be overstated. Yet research shows that many defined contribution plan participants fail to grasp the big-picture necessity of participating globally as investors, nor are they likely to realize the potential they could miss if they fail to do so. For an array of reasons, many defined contribution (DC) plan participants overweight their portfolios with domestic investments. Its likely that much of this behavior is due to home bias, in which U.S. investors simply dont appreciate the growing need to invest globally, but surely other factors are also at play. Plan sponsors have an opportunity to communicate these important messages, and can use advisor support to bring participant education in their plan to the next level.

Getting Beyond Ordinary- Managing Plan Costs in Automatic Programs
Firm: T. Rowe Price
Overview: This paper takes a head-on approach to the most common objection to advanced automatic programs cost. Thorough explanation and actual case studies help demonstrate how plan design elements such as employer contributions and eligibility can play a significant role in managing costs while implementing advanced automatic programs for improved retirement outcomes.

Getting Beyond Ordinary: Advances in Automatic Savings Program Design
Firm: T. Rowe Price
Overview:Defined contribution plans have experienced significant growth in the adoption of automatic savings programs since the 2006 introduction of the Pension Protection Act (PPA). While these programs have generally delivered laudable results, their progress can be hindered by certain plan designs.

Target-date fund adoption in 2012
Firm: Vanguard
Author: Jean A. Young
Overview: Use of target-date funds (TDFs) in DC plans continues to grow rapidly. At the end of 2012, 84% of Vanguard recordkept plans offered a TDF, half of all participants had a position in the funds, and the funds accounted for 31% of total plan contributions. This Vanguard research note examines the factors behind the growing popularity of TDFs and their impact on participant portfolios.

Constructing a defined contribution investment lineup: Vanguard's five best practices
Firm: Vanguard
Authors: Maria A. Bruno, CFP, Claire E. McCusker and Edward J. Saracino

How America Saves
Firm: Vanguard
Authors: Stephen P. Utkus and Jean A. Young
Overview: A report on Vanguard defined contribution data

Vanguard's approach to target-date funds
Firm: Vanguard
Authors: Scott J. Donaldson, CFA, CFP, Francis M. Kinniry, Jr., CFA, John Ameriks, Ph.D., Roger Aliaga-Daz, Ph.D., Brad Redding, CFA and Andrew J. Patterson, CFA