Business Development


The Role of Global Bonds in Defined Contribution Plan Design

Executive Summary

Global bonds seem to have become universally recognized and accepted in the world of defined benefit plans, with an allocation to them typically sought to potentially improve performance and dampen volatility. Similarly, we think global bonds are worthy of discussion as an asset class for defined contribution plans in terms of both a standalone allocation option and a component of any target date or target risk fund. The opportunity set in independent global sovereign credits and yield curves is so vast that we believe it makes little sense to limit participant selection or target fund allocations to US bonds alone. This paper reviews the argument for the inclusion of global bonds in defined contribution offerings, compares the alternative methods of making global bonds available in such plans, and discusses actions needed to enable this asset class’s entry into defined contribution plans.

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