Directing Investments

Extended and Alternative Assets in DC Plans

Extended and Alternative Assets in DC Plans


Extended and Alternative assets are a popular topic of conversation lately. As part of a professionally managed multi-asset class portfolio, Extended and Alternative asset classes have the potential to add alpha, manage volatility, and provide inflation protection. The operative words however are “professionally managed.” When used improperly these asset classes can have a paradoxical effect of potentially adding risk and increasing volatility, while eroding returns. Plan Sponsors need to assess their participants’ abilities to use these types of strategies appropriately and would be wise to think carefully about if and how they add them to an investment menu.


1) There are many types of Extended and Alternative investments and each performs differently depending upon the current and expected macro interest rate environment. Do your participants have the ability to identify where the economy is within the interest rate cycle?

2) Do your participants know which Extended and Alternative Assets to use in times of increasing, decreasing, or steady interest rates?

3) If you do add them to the menu, consider technological guardrails that limit participants’ exposure percentages to these
asset classes or making professional investment advice or guidance available to participants.

Extended and Alternative Assets serve varying purposes in a diversified portfolio with respect to inflation. Plan sponsors must assess their participants’ ability to identify the stages of the inflation cycle. and know when and how to deploy the appropriate strategies. This is a lot to expect from the typical participant.

BNY Mellon Retirement is a dedicated team of experienced retirement professionals representing BNY Mellon Investment Management’s retirement investment solutions for the Defined Contribution and Insurance/VA businesses, including retail mutual funds, institutional zero revenue share mutual funds, bank-maintained collective investment funds for employee benefit plan investors, and institutional separate accounts.

For more information, please call 1-800-992-5560.

Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. Contact your financial advisor to obtain a prospectus, or a summary prospectus, if available, that contains this and other information about the funds, and read it carefully before investing.

Non-traditional or alternative asset classes and investment strategies involve risk. Investing in these asset classes and employing these investment strategies involve greater risks than the asset class investments and strategies used by typical mutual funds, including increased use of short sales, leverage, derivative transactions and hedging strategies. Accordingly, investors should consider investing in non-traditional or alternatives only as part of an overall diversified portfolio.

Mutual funds are not deposits of, and are not insured or guaranteed by, any bank, financial institution, the FDIC or any other government agency, and investors may lose money. Also, an investor’s principal value and investment return will fluctuate, so that when redeemed, it may be worth more or less than the original investment. Also, past performance is not predictive of future performance.

Asset allocation and diversification cannot ensure a profit or protect against loss of principal. There can be no guarantee that any fund’s investment approach will be successful or that any particular level of return will be achieved for any fund.

The Dreyfus Corporation and MBSC Securities Corporation are subsidiaries of The Bank of New York Mellon Corporation. MBSC Securities Corporation, a registered broker-dealer, is the distributor for the Dreyfus Funds.

For Use with Institutional Investors and Financial Professionals Only. Not for Use with the General Public.