Data

The Callan DC Index™

Lori Lucas
Executive Vice President and
DC Practice Leader
lucas@callan.com

 

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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 Index Performance Squeezed by Lack of Non-U.S. Equity Diversification

The Callan DC Index™ started the year off on a reasonably sound note, gaining 2.15%. DC investors bested the broad market for the quarter by a hefty margin: the S&P 500 Index rose just 0.95% for the period. Still, the DC Index’s first-quarter performance trailed that of the typical 2035 target date fund (TDF), which gained 2.55%. TDFs benefited from a much higher exposure to non-U.S. equity—one of the best-performing asset classes during the period.

The average DC investor (as represented by the Index) has less than 6% of their portfolio in non-U.S. equity, while the typical 2035 TDF features a nearly 20% allocation to that asset class. DC investors’ smaller allocation to non-U.S. equity partially stems from their penchant for chasing investment performance: developed non-U.S. equity funds have generally struggled relative to U.S. equity in recent years.

Corporate DB plans performed more or less in line with 2035 TDFs during the quarter, but have outperformed both TDFs and the DC Index since inception by an annualized margin of 1.01% and 0.77%, respectively.

Investment Performance

1ST QUARTER2015