Fixed Income


Consultants prefer simple DC menus with two bond options. In addition to core/core plus, many recommend strategies with potential to enhance income and returns.

Which fixed income strategies do DC consultants recommend?

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Optimal Core Lineup
Number of Options
  • 1 Capital Preservation
  • 2 Fixed Income
  • 6 Equity
  • 1 Inflation Protection
*This represents the top strategies consultants would recommend
as stand-alone options on the core investment menu.

Go Custom or Go Blend?


When it comes to default investments, consultants say custom or packaged active/passive blend target-date funds may help calibrate risk exposures, aid diversification and reduce fees.

Plan Size (AUM)

$1 Billion +
53% 13% 21% 0% 13% 0%
$500 Million - $1 Billion
23% 18% 35% 0% 20% 3%
$200 Million - $500 Million
8% 8% 48% 6% 20% 9%

Target-Date Funds likely to be chosen

  • Custom
  • Semi-custom*
  • Packaged active/passive blend
  • Packaged active multi-manager
  • Single-manager passive
  • Single-manager active
*Prebuilt glide-path program from recordkeepers that uses core menu options
Percentages may not sum to 100% due to rounding

Manage Actively


Nearly all consultants said active management is important or very important in non-U.S. bonds (90%), U.S. bonds (89%) and non-U.S. equity (78%).

90% Very Important/Important

7% Somewhat Important

3% Not Important

89% Very Important/Important

7% Somewhat Important

4% Not Important

78% Very Important/Important

16% Somewhat Important

6% Not Important

20% Very Important/Important

56% Somewhat Important

24% Not Important

*Developed markets
Percentages may not sum to 100% due to rounding

Getting Retirement Income Right


As DC plans become the primary vehicle to accumulate retirement assets, the industry searches for the best product to help participants decumulate.

Liquidity
43% 46% 11% 0%
Inflation Protection
29% 57% 14% 0%
No new incremental fiduciary risk
48% 30% 21% 2%
IRA rollover-eligible
24% 46% 27% 3%
Low to little volatility
16% 46% 37% 2%
QDIA-eligible
18% 42% 29% 11%
Distribution sourced from income
15% 41% 34% 10%
Equity Exposure
17% 37% 40% 6%
Insurance guarantees
17% 30% 33% 19%
Stated Distribution Yield
3% 32% 50% 15%
High capital return objective
7% 26% 52% 15%
  • Very important
  • Important
  • Somewhat important
  • Not important