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10 August
Workers do not need private equity in their 401(k) plans

Private equity is illiquid, has high fees, and hasn’t produced high returns for state and local plans

US Department of Labor sign with the US Capitol in the background.
US Department of Labor sign with the US Capitol in the background.

Photo: AFP via Getty Images

The president just issued an executive order to encourage adding private equity and private credit — as well as other alternative investments — as options to 401(k) plans.

The Department of Labor (DOL) is tasked with accomplishing this goal. Some suggest the expansion could be limited to 10% to 20% of target-date funds, the default investment option in most 401(k) plans, but the goal may be broader.