Although some employers, including General Motors and Delphi, have caved into pressure to pare down the number of options in their 401(k) plans to boost participation levels, often replacing a menu of choices with target-date funds, that may be a disservice to sophisticated investors, The Wall Street Journal reports.

In fact, in doing so, they may be impairing participants’ ability to properly diversify, as pension plans traditionally do.

That’s why financial experts advise 401(k) sponsors to expand their offerings to  include real estate investment trusts, Treasury inflation-protected securities, commodities, high-yield bonds, currencies and other alternative investments that have little correlation to the stock market. Many exchange-traded funds invest in these areas, they note.

And if one’s 401(k) doesn’t include such investment choices, hold them in your IRA, financial advisers say. In fact, David Kudla, chief investment strategist at Mainstay Capital Management, said he’s witnessed “newfound interest” among 401(k) investors to broaden their holdings through IRAs.

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