Forty-six percent of defined contribution plans surveyed by Mercer offer TIPS or inflation-protection strategies involving multiple asset classes as investment options or plan to do so.
Another 10% of respondents intend to offer those options sometime within the next year.
Of the DC plans that offer inflation-protection strategies, TIPS was the most popular option at 24%, followed by multiple asset classes — such as a combination of TIPS, commodities, natural resources and REITs — at 12%.
Toni Brown, director of U.S. client consulting for Mercer's investment consulting business and co-author of the report, said in a telephone interview that the trend is driven by concerns over inflation as well as more strategies being offered by money managers.
“I think the reason plan sponsors are looking at diversified multiple-asset-class funds rather than pure TIPS is the added diversification you get from that,” she said.
The strategies can provide greater exposure to asset classes that participants might not be able to access through their current allocation, she said. Global REITs, for example, might not be offered in a participant's small-cap equity option but might more likely be offered in a diversified inflation-protection option.
DC plans with $1 billion or more in assets were most likely to offer inflation-protection, at 66%, while those with $250 million or less were least likely at 37%.
The survey of 233 plan sponsors was conducted in May.