DCALTA: DOL Approves Private Assets for Main Street Retirement Plans

WASHINGTON, June 9, 2020 /PRNewswire/ -- On June 3, the U.S. Department of Labor ("DOL") issued guidance designed to give Main Street investors saving for retirement better access to private assets.  The DOL issued an information letter confirming that plan fiduciaries can prudently offer participants access to target-date funds that contain an allocation to private equity.  The DOL also provided plan fiduciaries with guidance on the factors that a prudent fiduciary would consider when evaluating these types of new products. 

"Retirement savers should be excited about these developments," said Jonathan Epstein, President and Founder of the Defined Contribution Alternatives Association ("DCALTA").  "The DOL is helping plan fiduciaries broaden access to the opportunity set of investments that had previously been limited to institutional and other larger investors. DCALTA supports the inclusion of a professionally managed and diversified portfolio of alternative assets as a modest component of a multi-asset class fund, such as a target date fund.  DCALTA advocated for this DOL guidance in face to face meetings with the DOL staff and through written support."

"The DOL letter is a great step forward to provide a path for plan sponsors, advisors and other fiduciaries who would like to include alternatives appropriately in diversified multi-asset class type investment options," said Charlie Nelson, Chief Executive Officer of Retirement and Employee Benefits at Voya Financial and DCALTA board member.

DCALTA serves as a collective voice for alternative investments in defined contribution plans.  DCALTA has conducted research in collaboration with the Institute for Private Capital on the impact of including private market investments in balanced and time-varying multi-asset class portfolios, such as target-date, target-risk and balanced funds.  Research results found significant diversification and risk-adjusted return benefits when including an allocation to private investments on a net of fee basis. 

DCALTA met with the DOL on Feb. 24^th, 2020 to communicate the benefits of including alternative investments in defined contribution plans, and subsequently, provided a list of issues that plan fiduciaries should consider when responsibly evaluating private market investments for their participants.  "We are very pleased by the action the DOL has taken with their information letter and look forward to educating plan sponsors, industry professionals and other stakeholders on the responsible inclusion of alternative investments in long-term retirement portfolios," said Mr. Jonathan Epstein.  

"It is great to see the DOL, working with the SEC, to help 401(k) plan participants break down the barriers that had previously limited their access to diversifying asset classes," said Kevin Walsh of Groom Law Group, Chartered.

"By providing enhanced access to an asset class that can align well with a retirement saver's long-term investment horizon, the DOL has taken a big step towards helping savers ensure that they don't outlive their retirement savings," said David Levine of Groom Law Group, Chartered.

DCALTA

DCALTA is a trade association that exists to advance the utilization of alternative investments within a defined contribution framework. Through focused research, education and advocacy, we seek to better secure and enhance participant outcomes through the inclusion of hedge funds, private equity, and other alternative investments in the defined contribution model. Some DCALTA member firms include:

Adams Street Partners, Cambridge Associates, Conversus, Fairway Capital, FTSE Russell, Natixis, Neuberger Berman, Northern Trust, Nuveen, Pantheon, StepStone Group, Voya and many other organizations supporting our mission.

SOURCE DCALTA - Defined Contribution Alternatives Association

Related Links

www.dcalta.org