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John Hancock Investments finds DC plan sponsors adding alternatives

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John Hancock Investments' defined contribution (DC) clients are adding alternative mutual funds to their menu of plan options at a rapid pace.

Since the end of 2012, more than 400 plans have added John Hancock Investments' alternative strategies – including John Hancock Global Absolute Return Strategies Fund and John Hancock Alternative Asset Allocation Fund.
 
"After the heightened volatility of the past few years, plan sponsors and record-keepers are starting to embrace investments and strategies that are less correlated with traditional stock and bond markets," says Andrew G Arnott, president and CEO of John Hancock Investments. "These strategies offer participants the potential for a deeper level of diversification and a way to actively manage volatility. At the same time, the mutual fund structure offers the advantages of lower fees, daily liquidity, and stringent oversight that investors don't typically get through hedge funds."
 
Respondents in a January Ignites reader poll seemed to agree, predicting that liquid alternatives would be the top asset-gathering category in 2014, due both to their potential to generate returns and to the lukewarm outlook for traditional equity and fixed-income products.
 
"John Hancock Investments has provided access to alternative investments through our unique manager-of-managers approach for nearly two decades," says Todd J Cassler, president of institutional distribution for John Hancock Investments. "We have a great deal of experience identifying successful alternative managers, incorporating those strategies into diversified portfolios, and providing a high level of oversight. Our risk management and manager due diligence capabilities on alternative investments help to make our strategies attractive for retirement plans."
 
Among the firm's successful strategies in DC plans is the John Hancock Global Absolute Return Strategies Fund. The fund is managed by a team of portfolio managers at Standard Life Investments (Corporate Funds) Ltd and takes an unconstrained approach to pursuing positive returns with lower volatility.  
 
"In a retirement plan menu, absolute return funds can offer participants a way to reduce the effect of market volatility without settling for the near-zero returns of money markets," says Cassler.
 
Another fund that has been finding an audience in retirement plans is the John Hancock Alternative Asset Allocation Fund, a fund of funds that invests in alternative asset classes, including, but not limited to, currencies, global real estate, commodities, natural resources, and emerging-market debt.
 
"Retirement plan sponsors and participants are finding multiple benefits in this all-in-one approach," says Cassler. "Because the assets are professionally allocated among multiple alternative strategies and managers, participants don't need to worry about being conversant with all the details of all the strategies. At the same time, plan sponsors are able to add this varied alternative asset category in a single, diversified option."

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