NEPC’s Mikaylee O’Connor is quoted in this Pensions & Investments article exploring 2024 trends in corporate 401(k) plan investment lineup changes, particularly within the fixed-income space. View the full article on Pensions & Investments’ site here or read excerpts below.
More than 100 U.S. corporate 401(k) plans made investment option changes during 2024, with more than a quarter of those making changes to the active core-plus bond funds offered in their lineups.
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Mikaylee O’Connor, principal and head of defined contribution plan solutions at investment consultant NEPC, would not comment on specific funds, but she said there have been more manager challenges recently within the fixed-income space.
“While a lot of these active fixed-income managers can continue to outperform,” said O’Connor, “peer rankings do differ quite substantially within the core-plus space. And so when you’ve got kind of performance challenges, and potential other issues, you can see an increase in search activity.”
Before rates began to rise in 2022, low rates meant low returns across the board for fixed-income managers, O’Connor said.
“The range of difference between your top quartile and your bottom quartile manager for so long was so narrow, and now, as rates have risen, that range of difference in manager performance has increased, which has created a little bit more kind of focus within the fixed-income space,“ she said.
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