Industry Group DCALTA Issues Operational Framework For Daily Valuation Of Alternative Assets In 401(k) Plans

  • Author

    Jasleen Kour
  • Date

  • Time

    2 min read
  • Read by

    7.4k People

Consistent with its mission of enhancing retirement outcomes industry group DCALTA (the Defined Contribution Alternatives Association) has published a practical framework to provide plan sponsors clarity on the implementation of daily valuation of private assets  Available from DCALTAorg Daily Valuation of Alternative Assets in DC Plans: A Framework for Plan Sponsors and Industry Stakeholders describes a robust scalable approach based on current accounting practices   

In June 2020 the Department of Labor confirmed that 401(k) plans may include private equity  However uncertainty persists around how daily valuation and other operational procedures are best implemented

Including private assets and other alternative assets in 401(k) plans is relatively new in the United States said Jonathan Epstein DCALTA Founder and President  The full breadth of DCALTA members have looked deeply enough at the operational issues to form a meaningful industry consensus  This paper is therefore intended to be a practical roadmap for plan sponsors and their service providers so they may move toward implementation with greater confidence

The framework encompasses 11 positions grounded in principles of fair valuation ISO quality management and effective governance said Sheridan Porter DCALTA member and co-founder of valuation technology firm FEV Analytics These elements are important for retirement savers and plan sponsors to have confidence that the procedure used to value these private assets is fair and robust

Alternative assets include investments in private companies infrastructure and real estate that have been broadly adopted by defined benefit pensions and institutions like university endowments for their beneficial contribution to portfolio performance  Numerous studies have shown that the retirement outcomes of 401(k) savers could also benefit from access to alternative assets  DCALTA supports this position advocating for a professionally managed and diversified portfolio of such assets as a modest component of a multi-asset class fund such as a target date fund 

Individuals have demanded similar investment opportunities as institutions across multiple asset classes noted Bob Long DCALTA Director and CEO of Conversus a StepStone company 401(k) savers deserve target date fund options that include moderate diversified allocations to the high growth private companies and other alternative assets long employed by large institutions

DCALTA draws from the thought leadership of its members – a uniquely broad group of industry stakeholders including plan sponsors fiduciaries consultants accountants asset managers record-keepers and others – to research and reach general agreement on critical operational procedures like daily valuation

Operational considerations of private asset investing are often nuanced and relatively resource intensive added Mr Epstein  To the extent that operational issues impede progress we apply the collective wisdom of our members to analyze the issues and show the industry a path forward  Daily valuation is the first operational topic addressed by DCALTA with other important topics such as liquidity management to follow

To read the full whitepaper and/or executive summary click here

Enhancing Retirement Outcomes - a collective voice on alternative investments in defined contribution plans

DCALTA seeks to enhance the retirement security of defined contribution (DC) plan participants by the inclusion of alternative assets:

  • As a modest allocation within a long term focused multi-asset fund option on a DC plan menu
  • Through a well-diversified portfolio of alternative assets
  • Professionally managed within a prudent structure designed for the needs of DC plan participants

DCALTA's mission includes education research and advocacy on the benefits and alternative investments options within a defined contribution framework To learn more about DCALTA please visit dcaltaorg


Nationwide Franchises & Chains