The creation of the target date fund (TDF) sought to make available a professionally managed solution for individuals saving for retirement through their employer’s defined contribution (DC)/ 401(k) plan. In the U.S., DC assets represent 61% of total retirement assets¹ and that percentage is expected to continue to rise. However, despite improvements to investment options and participant behavior, on average, DC plans continue to see returns that lag defined benefit (DB) plans. Looking across two recent studies, this deficit is clear: 

• Corporate DB plans outperformed DC plans by an average of 70 bps, net of fees, per year between 1990 and 2012.²
  
• For the 10 years ended in 2016, DB plans saw annualized net returns of 5.4% compared with DC plans’ annualized net returns of 4.9% – a net return difference of approximately 50 bps.³ 

One possible reason for that gap is that DC plans do not currently have access to the same “toolkit” of investments that is available to DB plans. This is evident when looking at allocations to private markets. Access to those markets for DC plan participants is the focus of this special report.