Defined contribution default investment options have pulled back from emerging markets, with 48% of DC plans of FTSE 350 companies invested in the asset class compared with 55% a year ago, according to Schroders' FTSE DC report released Thursday.
In its report, Schroders said this was “a clear indication that schemes are moving out of this asset class.”
The report, which is produced twice a year, found the typical DC default has 80% of its assets in developed equities as of March 31, compared with 79% as of Oct. 31, 2013. However, FTSE 100 plans are more diverse than their FTSE 250 counterparts, with developed equity allocations of 77%, compared with 83% for FTSE 250 plans.
Allocation to alternative assets has increased to 8% from 7%; fixed income is 7%, down from 9%.
“There is a view that DC has grasped diversification,” said Stephen Bowles, head of defined contribution at Schroders, at the firm's annual DC conference. “This report shows that it is only moving toward diversification. The question is, how will these fragile trends fare in the new (post-U.K. budget) environment?”
The report tracked the DC default funds of 17 FTSE 100 companies and 14 FTSE 250 companies.
