Investment Themes

Defined Contribution - DC Investment

It’s time for investment to do more of the heavy lifting

Generating better DC outcomes through improved investment governance and innovative investment thinking.
Unlike defined benefit (DB), with its increasingly negative cash flow and de-risking focus, defined contribution (DC) has positive cash flow and a growth focus. Most DC schemes also have a very long investment horizon. However, most DC schemes, DC default funds in particular, still predominantly invest, via insurance platforms, in highly liquid asset classes. As a result, most are missing out on the many longer-term illiquid asset opportunities and the associated illiquidity and complexity risk premia that populate the asset portfolios and returns of most DB schemes. These can add as much as one per cent per annum to long-run risk-adjusted returns.
By advancing DC investment governance to leading-edge DB standards, DC schemes would be well placed to embrace those asset classes and investment techniques increasingly utilised by DB schemes, such as investing in real estate and social and renewable energy infrastructure and better integrating ESG factors into investment decision making. Doing so really could be the difference between retirement bliss and retirement penury.

PDF

Full paper – Generating better DC outcomes

PDF

Summary paper – Generating better DC outcomes through improved investment governance and innovative investment thinking

Related items

27 November 2020

Covid-19 vaccines, lockdowns and equities

With the Covid-19 case count rising rapidly across the United States and Europe, the immediate economic outlook associated with renewed lockdowns is turning darker.
Read time - 6 min
21 November 2020

Defined contribution - The Future Book

The 2020 edition of the DC Future Book has found that UK Defined Contribution (DC) pension assets are growing, despite a challenging start to the year due to the Covid-19 pandemic.
20 September 2020

Toby Nangle

Co-Head of Global Asset Allocation & Head of Multi-Asset, EMEA

Asset Allocation Update - Sep 2020

Find out about our latest asset allocation.
Read time - 7 min

You may also like

About Us

Millions of people around the world rely on Columbia Threadneedle Investments to manage their money. We look after investments for individual investors, financial advisers and wealth managers, as well as insurance firms, pension funds and other institutions.

Our funds

Columbia Threadneedle Investments has a comprehensive range of investment funds catering for a broad range of objectives.

Responsible business

As a leading global asset management group, Columbia Threadneedle Investments aims to deliver positive outcomes that meet the needs of our stakeholders and we commit to always act responsibly, transparently and in the best.