Tools

The Callan DC Index™

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

 

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The Callan Database

The Callan Database
By the Numbers

Callan's Approach to
Performance Measurement

The Callan DC Index™

Performance, asset allocation, and cash flows of over 90 large defined contribution plans representing approximately $150 billion in assets are tracked in the Callan DC Index™.

Participants Jittery Despite Solid Performance

The average defined contribution (DC) plan gained 3.92% in the third quarter of 2016, as measured by the Callan DC Index™. The performance was driven by impressive gains by U.S. equity: The Russell 3000 Index rose 4.40% for the period. Still, the Index trailed the Age 45 Target Date Fund—the average of target date funds that would be selected by participants age 45 and retiring at age 65—which gained 4.53%. The DC Index was hampered by its lack of diversification to non-U.S. equity: the MSCI ACWI ex USA Index rose 6.91% for the period. The average DC plan has a 5.5% allocation to non-U.S. equity and emerging markets, while the Age 45 Target Date Fund has an allocation of 24%. Since inception, the DC Index's annual return of 5.41% has trailed the Age 45 Target Date Fund by 74 basis points.

The Age 45 Target Date Fund is a composite representing the target date fund vintage that a 45-year-old participant (the approximate age of the typical DC participant) would have held in any given year. Currently that is the 2035 target date vintage. Further, the Age 45 Target Date Fund consists of only institutional share class managers. Callan believes that eliminating retail share classes from the Age 45 Target Date Fund benchmark is consistent with institutional management of large DC plans.

3RD QUARTER2016