Skip to main content
PGIM LogoPGIM Logo
  • About
    • Diversity, Equity and Inclusion
    • Contact Us
  • INSIGHTS
  • DC Themes

    • DC Plan Sponsor Survey
    • Financial Wellness
    • Retirement Income
    • Target Date Funds
  • Solutions
    • Target Date Funds
    • Advice Solutions
    • Retirement Spending Portfolios
  • Careers

    • Careers at PGIM
    • Job Opportunities
waterfront
White Paper

Five Reasons Why Alternative Investments in DC Plans Makes SenseFiveReasonsWhyAlternativeInvestmentsinDCPlansMakesSense

By Josh Cohen — Feb 24, 2020

1 min

Share
  • Mail
  • LinkedIn
  • Twitter
  • Copy URL

Share

Vanguard recently created some buzz by making private equity options available on its platform. While this offering is currently for Vanguard’s non-profit institutional clients, many articles suggested this could lead to making alternative investments more available to retail investors – the so-called democratization of alternative investments.

I believe individual investors should have more access to the same types of investment strategies currently available to institutional investors and high-net-worth individuals, such as private equity, hedge funds and direct real estate. Indeed, in a world of aging populations, changing demographics, and issues of inequality, it will continue to be imperative that the average American worker has access to quality investments to help them build and maintain wealth, as well as institutional-quality retirement income solutions to manage their risks in retirement.

To that end, while there are many people talking about making alternative investment strategies available in retail-type accounts, I believe the low-hanging fruit is to look to the Defined Contribution (DC) market as the obvious place to focus, for the following five reasons:

Fiduciary Oversight: There is no higher fiduciary standard than ERISA, and participants in a DC plan have a fiduciary that needs to ensure their best interests are served.
Institutional Pricing: Employers can use their scale to bring institutional investments, such as alternatives, to the average American worker at a price they could not have achieved on their own.
Professional Management: In a DC plan, alternatives can be incorporated in professionally managed solutions like a Target Date Fund, overseen by knowledgeable investment professionals.
Long-Term Time Horizon: Many alternative investments are illiquid and require a long-term holding period to pay off. Saving for retirement can be a 60-year or more proposition, making alts a perfect vehicle for less liquid investments with a longer-term payoff.
Broadest Access: For most middle-income Americans, the bulk of their wealth is in housing and their retirement plans. If we want to provide access to alternative investments to a majority of Americans, DC plans are where this can best happen.
There is a real fairness case to democratize investment opportunities and allow more American workers access to the types of strategies that only institutions and wealthy Americans currently utilize. While many plan sponsors have fiduciary concerns in adding these to DC plans, there are also fiduciary concerns of not making these investments available given the compelling case to do so.

  • JC
    By Josh Cohen
  • INSIGHTS

    • The Accidental Plan Sponsor Podcast
  • DC THEMES

    • DC Plan Sponsor Survey
    • Financial Wellness
    • Retirement Income
    • Target Date Funds
  • SOLUTIONS

    • Target Date Funds
    • Advice Solutions
    • Retirement Spending Portfolios
  • OTHER RESOURCES

    • Careers at PGIM
    • Contact Us
    • Diversity, Equity & Inclusion
    • Form CRS
    • Job Opportunities
    • Request for Information
PGIM Logo
  • Terms & Conditions
  • Privacy Policy
  • Accessibility Help
  • Cookie Preference Center

All investments involve risk, including the possible loss of capital.

PGIM DC Solutions LLC ("PGIM DC Solutions") is an SEC-registered investment adviser, a Delaware limited liability company, and an indirect wholly-owned subsidiary of PGIM, Inc. ("PGIM"), the principal asset management business of Prudential Financial, Inc. ("PFI") of the United States of America. Registration with the SEC does not imply a certain level of skill or training. PFI of the United States is not affiliated in any manner with Prudential plc incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom.

The content and materials presented here are for informational, illustrative and educational purposes only and should not be construed as investment advice or an offer or solicitation in respect of any products or services to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. The information presented is not a recommendation about managing or investing retirement savings and does not take into account individual investment objectives or financial situations.

PGIM DC Solutions aims to help participants achieve their retirement goals through their suite of “PGIM RetireWell™” solutions. These solutions may include a range of investment options including target date portfolios, retirement income strategies, and managed accounts that can be coupled with our proprietary advice engine. There is no guarantee that investment or retirement goals will be achieved.  Use of the term “RetireWell” and any related phrase is not intended to indicate that such- goals will be achieved.

PGIM, PGIM DC Solutions logo and the Rock design are service marks of PFI and its related entities, registered in many jurisdictions worldwide.

© 2025 PGIM DC Solutions. All Rights Reserved.

PGIM Logo
PGIM Logo
PGIM Logo
PGIM Logo

You are viewing this page in preview mode.

Edit Page