The US Department of Labor proposed new rules on Monday to clarify how retirement plans can add alternative assets such as private equity and cryptocurrencies to 401(k) accounts. This move follows a decree by President Donald Trump last summer and could provide asset management companies with a new source of capital.
Industry groups argue that investments in private markets can enhance long-term returns and diversification for savers, while skeptics warn of higher fees, complexity, and limited liquidity that could pose risks for retail investors.
The guidelines specify how fiduciaries, who have a fiduciary obligation to act in the best interest of retirement plan participants, can incorporate these assets into retirement plans. Fiduciaries who adhere to these rules will be granted “safe harbor” status, protecting them from legal action.
Treasury Secretary Scott Bessent stated that the proposed rule is a “first step in implementing the presidential decree in a secure and intelligent manner, expanding access to additional retirement plan options for millions of Americans while keeping in mind the importance of safeguarding retirement assets.”
This decision could be a boon for major alternative asset managers like Blackstone (BX.N), KKR (KKR.N), and Apollo Global Management (APO.N), as the new rules could open up a vast pool of retirement savings for them.
In recent months, they have faced a wave of withdrawals from their illiquid private credit funds, amidst investor concerns about this approximately $2 trillion sector.
In September, the Managed Fund Association supported the initiative to allow savers to target higher returns and diversify through alternative assets, while emphasizing the need for safeguards to be put in place.
“We look forward to continuing to work with the DOL on a final rule that supports innovation and maintains the strong investor protections that Americans currently benefit from,” a spokesperson for the Investment Company Institute, a professional group, stated on Monday.
