The Callan DC Index™
Performance, asset allocation, and cash flows of nearly 90 large defined contribution plans representing more than $140 billion in assets are tracked in the Callan DC Index™.
DC Plans Manage to Stay Positive in the Second Quarter
The average defined contribution (DC) plan managed to avoid losses in the second quarter of 2015—but just barely. According to the Callan DC Index™, the typical DC plan ended June 30, 2015 with a 0.08% gain. This placed DC plans on firmer ground than the typical 2035 target date fund (TDF) or corporate defined benefit (DB) plan, which lost 0.13% and 0.71%, respectively.
The Callan DC Index™ remained positive due to its lower exposure to bond markets than the typical DB plan. DC plans tend to favor stable value (10.0%) over U.S. bonds (6.4%) within their fixed income exposure. In contrast, corporate DB plans feature a heavy weighting in U.S. bonds (40.0%). With the Barclays U.S. Aggregate Index off 1.68% for the quarter, DB plans felt the pressure.
Still, since the Index’s inception, the average corporate DB plan has outperformed DC plans by 0.66% annually. In contrast, TDFs (as measured by the Average 2035 Fund) have slightly underperformed both DB and DC over the long-term.