Defined contribution assets under management reached an all-time high of $3.78 trillion in 2011, exceeding the previous record of $3.7 trillion in 2007, according to Pensions & Investments' latest survey of DC managers.
Internally managed assets advanced to $3.45 trillion in 2011, topping the previous record of $3.3 trillion in 2010.
Assets grew even as allocations became a bit more conservative. Among internally managed assets, the allocation to fixed income was 22.3% for the year ended Dec. 31, vs. 21.2% the previous year. The stable value allocation rose to 14.9% from 13.6%.
The equity allocation slipped to 52.9% from 53.9%. Allocations barely budged for cash (to 5.2% from 5.1%) and for alternatives (to 1.3% from 1.4%). “Other” investments fell to 3.4% from 4.8%.
The tilt to more conservative investing indicates “people are concerned about the economy and stock market volatility,” said Sue Walton, a Chicago-based senior consultant with Towers Watson Investment Services, Inc., a subsidiary of Towers Watson & Co.
Other trends noted by Towers Watson among its predominantly large-plan clients are greater use of index funds and a simplification of fund lineups. Retirement plans that once had eight to 10 core options are cutting the number to five or six, she said, while funds that might have offered one or two index funds are raising the number to four.
With index funds, part of the attraction is lower fees, Ms. Walton added, and also making choices more understandable for participants. Rather than offering multiple types of bond funds, providing an actively managed bond fund and a passively managed bond fund will “simplify the discussion with participants,” she said.
The P&I survey also found that internally managed assets in mutual funds declined by 1% to $1.56 trillion, while separate account assets jumped 21.4% to $672.8 billion and assets in pooled and/or commingled accounts grew by 1.2% to $1.15 trillion.