Despite the low returns in fixed income, the asset class is still an important part of a defined contribution plan's core menu, Dan McManus, supervisor of pensions and investments for the Air Line Pilots Association International, said in a recent Pensions & Investments interview.
“All asset classes, you could argue, are going to have a much different return pattern going forward than they have had historically. Because rates are low now doesn't mean that you avoid something,” Mr. McManus said.
“The realized performance historically of fixed income has been strong,” Mr. McManus added.
The requirements of ERISA call for meaningful distinctions and differences within the investment choices, Mr. McManus said.
The current low-rate environment should lead plan executives to think critically about what types of fixed-income options they include in their plan, McManus said.
For the full interview, watch the video.