Traditionally, 401(k) investment menus have consisted of core asset classes such as U.S. stocks and investment-grade bonds. However, defined benefit plans have relied on a much broader range of asset classes and have historically outperformed defined contribution plans, says Bill McDermott, head of defined contribution services at Goldman Sachs Asset Management.

Defined contribution plan participants should have similar opportunities to broadly diversify their retirement savings, McDermott says. Defined benefit plans are already using non-correlative, non-traditional asset classes like commodities, emerging markets equity and emerging markets debt. The inclusion of these non-correlative asset classes in a defined contribution plan menu could help participants manage volatility, protect against inflation and provide new sources of return when traditional stock and bond markets underperform.

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