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IPA Submits Letter Responding to DOL Request on Factors to Consider
When Evaluating Alternative Investments for Defined Contribution Plans


The IPA today to the U.S. Department of Labor (DOL) in response to a request by the DOL for input on what plan fiduciaries should consider when evaluating less liquid products for defined contribution retirement plans. Today’s letter is the latest initiative in the IPA’s ongoing effort advocating for the inclusion of portfolio diversifying investments (PDIs) in defined contribution plans.

Our letter details the following six factors that a prudent plan fiduciary should focus on when evaluating more complex products like non-listed real estate: (1) Liquidity, (2) Time Horizon, (3) Valuation, (4) Fees, (5) Management, and (6) Legal Structure. We remind the DOL that defined benefit plans have used real estate to diversify their portfolios and inoculate plans from some of the volatility we see today in daily-traded stocks and bonds. Those defined benefit plans have access to the U.S.’s $17 trillion commercial real estate market, but defined contribution plans, if they have access at all, are only able to diversify using the $1 trillion in the traded public equity market. The DOL should expand investment choices beyond mutual funds and provide a better framework for fiduciaries to follow when selecting alternative asset classes like real estate. The IPA will be discussing this issue with DOL staff and senior officials in the upcoming weeks.

In partnership with the Defined Contribution Alternative Association (DCALTA), on July 22, 2019, IPA also to the DOL supporting broad guidance that would encourage plan fiduciaries to consider a wider array of asset classes when making portfolio allocation decisions, reiterating that fees are only one of many components fiduciaries should consider.

Further, in response to the Concept Release on Harmonization of Securities Offering Exemptions, on September 24, 2019 the IPA also encouraged the U.S. Securities and Exchange Commission to modernize “qualified purchaser” rules and related no action letters that require private funds to “look through” to determine if each 401(k) participant is accredited. This change will further support expansion of the DC industry for alternative investments.

The IPA would like to thank Mark Goldberg, CEO, Griffin Capital Securities, for leading this IPA Board initiative, along with our working group members: Trisha Miller, Executive Managing Director, Robert A. Stanger and Co.; Leon Volchyok, Managing Director, Blackstone; Jeff Taylor, Managing Director and Chief Operating Officer, Black Creek Group; Anne-Marie Vandenberg, President and Chief Operating Officer, RREEF Property Trust Portfolio Manager, DWS Group; and Dan Cullen, Partner, Baker & McKenzie.

We look forward to driving this critical initiative forward on behalf of the entire industry.


Anya Coverman
SVP, Government Affairs and General Counsel
Institute for Portfolio Alternatives