Only 13% of retirement plans offer alternative investment options, according to researchreleased Wednesday by PGIM, theglobal asset management business ofPrudential Financial.
In addition, just 24% of plan sponsors have incorporated environmental, social and governance approachesinto the plan over the past three years,PGIM reported.
“The average American workerdoesn’t have access to the same typesof investments currently available toinstitutional and high-net-worth investors,” PGIM’s head of institutionaldefined contribution, Josh Cohen, saidin a statement.
“In a world where we are experiencing
changing demographics, aging popula-
tions and issues of inequality, it is impera-
tive that individual investors have access
to quality investments to help them build
and maintain their wealth, particularly
when it comes to retirement.”
Cohen argued in a blog post last year
that defined contribution plans may be
the best starting point, as they offer the
fiduciary oversight, institutional pricing
and long-term time horizon needed to
effectively deliver ESG and alternative
strategies to individuals.
PGIM’s new research is the secondof a three-part series on the evolvingDC landscape conducted in partnershipwith Greenwich Associates, which surveyed 138 DC plan sponsors from March5 through July 17. Each plan sponsor hadat least one 401(k) plan and at least $100million in 401(k) assets.
Plan sponsors that say they cur-
rently incorporate specific alternative
investment options as part of their
target-date funds are:
• Real estate private equity: 9%
• Real estate private debt: 5%
• Hedge funds: 4%
• Private equity: 4%
• Liquid alternatives: 4%.
Sixty-seven percent of plan sponsorsexplained that the need for enhancedparticipant education was the reason fornot including alternatives as an investment option. Around a third said thereasons were operational challenges,perceived litigation risk and cost.
BITWISE PLANS TO LAUNCH PUBLIC
Bitwise Asset Management has begun theregulatory process to launch a secondcryptocurrency fund open to the public,one focused just on Bitcoin. Its first fund,the Bitwise 10 Crypto Index Fund (BITW)debuted in early December and currentlyhas close to $590 million in assets.
The new fund, the Bitwise BitcoinFund, has been available as a privateplacement to accredited investors sinceDecember 2018, like BITW was beforeits launch for public consumption.
If cleared by the Financial Industry
Regulatory Authority and the Depository
Trust and Clearing Corp., the Bitwise
Bitcoin Fund would be available to trade
in traditional brokerage accounts.
Bitwise plans to list the fund on theOTCQX, the top tier of the over-the-counter market, and would charge a 1.5%expense ratio compared to the 2% chargedby the Grayscale Bitcoin Trust (GBTC) and2.5% charged by BITW, which includesother cryptocurrencies. Fidelity DigitalAsset Services would serve as custodian.
A December 2020 Bitwise surveyof 1,000 financial advisors’ attitudestoward crypto assets found that 9.4%were including cryptocurrencies in client portfolios and 17% were consideringa crypto allocation in 2021.
About half said they were attracted tocrypto’s low correlation to other assets,38% were attracted to potential highreturns and 25% saw crypto as a potential hedge against inflation, up from 9%the previous year.
In early February BitCoin was trading near $35,000, down from a high near$41,000 in early January but more than3. 5 times its price a year ago. In earlyafternoon trading on Feb. 2, BITW wastrading near $56 a share, well below itsintraday high of $147 reached duringits first week of trading but more thandouble its price on its first day.
Asked whether the new fund is partof a larger effort by Bitcoin champions to get the Securities and ExchangeCommission to approve a Bitcoin ETF,which it has rejected in the past, MattHougan, Bitwise’s chief investmentofficer, said, “We and other asset managers are working to make a Bitcoin orcrypto ETF a reality” and “we will getthere eventually.”
By Michael S. Fischer and Bernice Napach
Few Retirement Plans Offer Alts in Target
Date Funds: PGIM
Also, Bitwise plans to launch a new public cryptocurrency fund.