During Benefits Canada’s annual DC Plan Summit, plan sponsors participated in interactive sessions. They split into small groups and were given questions to discuss. Based on these discussions, moderators later offered their insights and relayed key take-aways.
Jafer Naqvi, director, client strategy, with Greystone Managed Investments shares the best ideas from the question he moderated: Should DC plans consider alternative investments?
There are three primary considerations that leading DC plan sponsors recommend when using alternative investments: have a good sense of which alternatives make sense for your plan; use institutional and professional oversight instead of stand-alone options; and understand the additional governance requirements.
Call to action:
- Employers need to have alternative assets that match the objectives of a retirement savings plan. If you have members who are going to be invested for five, 10, 20 or 40 years, utilize alternative asset classes that can match that investment horizon. Asset classes such as real estate and infrastructure can match the retirement horizon of long-term savers.
- Alternatives make the most sense in balanced and asset allocation funds or TDFs, where an institutional professional manages cash flows and allocations.
- Extra governance is required to understand fund and fee structures. It is important that an investment manager’s interests are aligned with those of plan members.
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