An executive order signed by Trump allows private equity investments in 401(k) plans, aimed at accessing the $12 trillion retirement market. Experts express concern about risks associated with private equity, including illiquidity and high fees. Critics emphasize that 401(k) plans should prioritize simplicity and low-risk options. The move reflects a trend of integrating public and private markets, and analysts note that the private equity sector has seen significant growth recently, although higher rates may impact future dealmaking.
"Private equity kind of always gets what it wants in Congress, but I think it's a bad idea. It's illiquid, the fees are very high. Private equity funds, for the most part, don't beat the stock market."
"I don't think it's a good investment for the rank and file retail market."
The push to include private equity in retirement plans is just the latest development in a long-running trend of combining public and private markets.
Private equity investments are often concentrated in a small number of portfolio companies, are less liquid than stocks and bonds, and carry valuations that can be difficult to measure day-to-day.
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