Forty percent of U.K. defined contribution plan trustees who believe that DC investment strategies lack sophistication of defined benefit funds feel they will never catch up, according to a survey by consultant Hymans Robertson.

In the 2018 edition of the survey, 42% of U.K. defined contribution plan trustees said DC investment strategies lack the sophistication of those used by defined benefit funds, compared to 58% who felt DC strategies were on par with DB, according to the survey.

Half of the survey respondents who agreed DC plans’ investment strategies lack sophistication, said it will take at least 10 years for DC plans to catch up with their DB counterparts, while 10% said it will take longer than 10 years.

Trustees surveyed in Hymans study said pension funds can invest in unlisted assets such as infrastructure, real estate and private equity that are unavailable to DC plans because of daily valuation requirements and the additional 1% to 2% management fee. In addition, trustees said global small-cap equity and overseas corporate bonds are difficult to access on a stand-alone basis by these DC plans.

Some 43% of trustees of DC plans with assets of less than £100 million ($130 million) believe DC plans will never be as sophisticated as DB in terms of their investments, compared to more than a third of trustees for larger plans with assets of more than £100 million, who felt that this could happen within the next five years.

“The sheer scale of assets enjoyed by DB schemes provides them with greater scope for sophistication and innovation, so much so that even the largest DC trust schemes that exist today would struggle to enter into the same investments,” said Raj Shah, head of DC investment at Hymans Robertson, in a news release. “Despite this, I wasn’t surprised to see greater optimism amongst those trustees managing larger DC schemes than those working with smaller schemes. Schemes with less than £100 million in assets are likely to struggle adopting more sophisticated strategies as they will be unable to receive the benefits of scale enjoyed by those with larger pools of assets.”

Mr. Shah added: “Thankfully, the DC evolution is not showing any signs of slowing down, and I can certainly see a light at the end of the tunnel. As long as the scale of assets in DC continues to grow and access to alternative asset classes widens, then sophistication in DC investment will improve. While price and contribution to risk-adjusted return will still be the major factors to consider when selecting an asset class, it is refreshing to see that DC product development is steadily gaining traction.”

Hymans Robertson surveyed 100 DC trustees.