Real Estate and Alternative Asset Allocations of U.S. Firms' Defined Benefit Pension Plans

Abstract

This study examines the role of real estate and alternative assets in the investment portfolio of defined benefit (DB) pension plans offered by U.S. firms for the period 2002 to 201'3 These plans provide a unique reflection of the confluence of regulatory, accounting, and economic changes that have recently taken plance. Results indicate a quarter of our sample plans invest in real estate while more than half invest in alternative assets. Logistic and panel data regression analyses generally indicate that pension plan size, contribution levels, and funding status are significant in explaining the likelihood of and the variance in the allocation of plan assets to real estate and alternative investments.