During the year ended Sept. 30, a period in which the Standard & Poor's 500 stock index returned 19.7%, that domestic equity bias was a main contributor to asset growth; that is both a positive and a potential negative, with the possibility of being saddled with a single asset class or style lagging behind the market.
“We may see the introduction and the beginning of conversations of white-label funds within DC plans,” Ms. Flodin said, referring to the multimanager structure that plan sponsors can use to provide exposure to a broad asset class.
“Having that kind of structure and not having a singular manager could help for the next recession,” Ms. Flodin said.
“Hopefully that would protect the participants.”
Among defined benefit plans, there exists as well a disparity between the allocations of public DB plans and corporate DB plans. Among the top 200 plans, public plans as of Sept. 30 had an average 29.2% allocated to domestic equity compared to corporates' 23.7%.
Within the top 200, public DB plans represented $3.205 trillion in assets and corporate DB plans represented $1.187 trillion in assets as of Sept. 30.
There even exists a significant disparity in the asset allocations among corporate DB plans, said Bryan Ward, practice leader for corporate retirement at Aon Hewitt Investment Consulting Inc., Lincolnshire, Ill.
In calendar year 2014, for example, Mr. Ward said, the dispersion of overall returns by Aon Hewitt's corporate defined benefit plan clients was extremely wide, ranging from a high of 15.5% to a low of zero.
“That dispersion really reflects the various asset allocations that corporate DB plans have today,” Mr. Ward said.
“Anywhere from fully hedged, zero to 10% equity and the rest in some customized fixed-income strategies, to some that are still 75% to 80% equity.”
The former reflects the liability-driven investing that executives with closed and frozen plans have embraced, while the latter reflects a more traditional approach to asset allocation in open plans.
Overall, public DB plans have remained for the most part open plans, without the liability hedging that many corporate DB plans have instituted. Corporate DB plans among the top 200 on the whole had an average domestic fixed-income allocation of 33.2% as of Sept. 30, up from 32.4% the previous year.
Meanwhile, public DB plans in that universe had an average domestic fixed-income allocation of 20.8% as of Sept. 30, the same as the previous year.
The rest of the average allocation among corporate DB plans in the top 200 was 15.3% international equity, 7.5% alternatives investments, 6.5% private equity, 4.9% real estate equity, 3.5% global equity, 2.2% global/international fixed income, 2.1% cash and 1.1% other.
The rest of the average allocation among public DB plans in the top 200 was 19.7% international equity, 9.3% private equity, 7.8% real estate equity, 5% alternative investments, 2.4% global equity, 2.1% global/international fixed income, 1.8% cash and 1.9% other.
The latest P&I survey also saw a slight change in the five largest U.S. retirement plans.
The top-ranked U.S. retirement plan was the Federal Retirement Thrift Savings Plan, Washington, which reported $422.2 billion in total assets as of Sept. 30, up 12.6% from the previous year. It has been the top-ranked U.S. retirement plan since 2009, when it overtook CalPERS.
The Sacramento-based California Public Employees' Retirement System reported $296.74 billion in assets as of Sept. 30, up 8.7% in the period.
The rest of the top five were the California State Teachers' Retirement System, West Sacramento, at $186.95 billion as of Sept. 30, an 8.4% jump from the previous year; New York State Common Retirement Fund, Albany, $178.25 billion, also up 8.7%; and the New York City Retirement Systems, $158.7 billion, up 10.3%.
The five New York City pension funds supplanted the Florida State Board of Administration, Tallahassee, in the top five. Now ranked sixth, the FSBA reported $154.66 billion in retirement assets, a 5.7% increase from the previous year.
The largest corporate retirement plan belongs to Boeing Co., Chicago, whose combined DB and DC assets ranked eighth overall. As of Sept. 30, Boeing had $106.04 billion in combined DB and DC plan assets, $60.69 billion in DB and $45.35 billion in DC.
The largest union plan, the $36.61 billion Western Conference of Teamsters Pension Trust, Seattle, ranked 45th.