Defined contribution plans increasingly turned to investments in target-date funds and U.S. equities in 2014. And that may not be such a good thing.
Northern Trust's third annual DC Tracker found that DC plan participants are upping the amount they put into TDFs, which garnered 32.7 percent of asset flows in the plans tracked. TDFs make up 22 percent of all assets by market value in the 2015 DC Tracker, up from 15.7 pecent the previous year.
Such funds relieve participants of the need to rebalance and decrease the risk level of their investments as they approach retirement, but they're also doing something else: funneling participants more directly into U.S. equities. That's increasing a home bias that may already be counterproductive to true diversification.
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