While real estate is the third-largest asset class in the United States, defined contribution (DC) retirement plans currently hold only a small fraction of their assets in private real estate, relying primarily on public REITs. In contrast, defined benefit (DB) plans and other institutional investors allocate most of their real estate exposure to private holdings. Tripp Braillard, head of DC distribution at Clarion, recently explained the potential for expanding DC plan access to private real estate.
DC plans piddling stake in private real estate is not due to a lack of interest, but primarily because of perceived operational challenges, such as fund structure, liquidity requirements, daily valuations and administrative processes.
“DC plan sponsors typically prioritize operational simplicity,” Braillard says. Public REIT index funds, actively managed REIT mutual funds, and CIT funds resemble other liquid equity and bond options commonly used in DC menus. “Ease of
