In a period when equities performed better than other asset classes, American DC retirement plan members cut their holdings in domestic equities and increased their investments in fixed income assets in 2012.

Northern Trust’s Defined Contribution Tracker shows that participants reduced their exposure to U.S. stocks even as the Russell 3000 Index jumped 16.4% for the year.

While equities remained the largest asset class at 31.1%, fixed income saw inflows of 9.2% for the year despite lower bond yields as investors looked for safe havens from volatility and uncertainty.

Target retirement date funds dominated asset inflows, growing to 14.6% from 11.9% of participant allocations, and international equity grew to 7.6% from 5.9%.

“As the preferred qualified default investment of most DC plans, target retirement date funds have benefited from the increased adoption of auto-enrollment and other automated features, and we anticipate participant outcomes will show potential improvement through the use of these professionally managed investment solutions,” says Susan Czochara, senior product manager, defined contribution solutions, at Northern Trust.

The firm launched the tracker tool this month. It analyzes data from 85 retirement plans, representing approximately 1.5 million participants and US$190 billion in market value.

Copyright © 2022 Transcontinental Media G.P. Originally published on benefitscanada.com

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