Trump’s executive order could open the door to private market investments in 401(k) plans

Former President Donald Trump is reportedly preparing an executive order aimed at expanding access to private market investments within retirement accounts—a move that could significantly reshape how Americans invest through their 401(k) plans. 

The initiative would broaden the range of available investment options to include private equity, venture capital, real estate, and hedge funds.

Americans Could Gain New Tools to Diversify Retirement Portfolios

According to The Wall Street Journal, which cited sources familiar with the matter, the forthcoming order would direct the Department of Labor and the Securities and Exchange Commission (SEC) to develop regulatory guidelines for employers and plan administrators on how to incorporate private market assets into 401(k) retirement plans. 

While final details are still under review, the policy could open new doors for American workers looking to diversify their retirement portfolios.

Private market investments—also known as private assets—are financial instruments not traded on public exchanges. Historically, these assets have been largely inaccessible to the average investor and include private equity, venture capital, real estate investments, and hedge funds. 

While they offer the potential for higher returns, they also come with increased risks and lower liquidity compared to traditional investments like publicly traded stocks and bonds.

Despite their complexity and cost, private assets may provide enhanced diversification for long-term investors seeking to boost portfolio performance. Bryan Corbett, President and CEO of the Managed Funds Association (MFA), a trade group representing the alternative asset management industry, praised the expected order.

“Expanding access to alternative investments in 401(k) plans will provide more Americans with the diversification and investment options they need to build wealth and save for a successful retirement,” Corbett told Reuters.

Financial Firms Responding Ahead of the Order

In anticipation of the executive order, several financial institutions have already begun rolling out products that blend traditional and private market assets. 

For example, Apollo Global Management and State Street have launched target-date funds that include private market holdings, while Blue Owl Capital recently announced a partnership with Voya to develop 401(k) investment products featuring private assets.

If implemented, the measure could mark a significant shift in retirement planning, giving Americans broader investment choices and access to previously exclusive asset classes.