Trump’s big plans might bring private equity, crypto & real estate to your 401(k) — but is that a good thing?

On August 7, President Donald Trump signed an executive order directing the U.S. Department of Labor to revisit guidance on including alternative investments — such as private equity, real estate, and cryptocurrency — in retirement plans like 401(k)s and 403(b)s.

The order calls for clarification on how plan fiduciaries can legally include these assets, including specific steps they must take to comply with regulations.

Significantly, this is not a change in policy, but it signals strong White House support for allowing riskier investment options in Americans’ retirement plans.

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Would alternative assets help or hurt?

There are several positives to this change that could unlock new opportunities for retirement savers. However, everyday investors may want to proceed cautiously, or at least do thorough due diligence.

Pros

Supporters argue that diversifying with private equity, real estate, and cryptocurrency could improve portfolio diversification and long-term growth.

For example, Vanguard estimates that private equity could generate annual returns around 9%, outperforming typical public-market funds.

Access to traditionally exclusive investments may also expand. Firms like BlackRock, Apollo, and KKR have historically limited private assets to institutional or high-net-worth investors. Now, platforms like Empower are preparing to offer them through target-date funds in retirement plans.

The order may accelerate the inclusion of crypto-based funds or ETFs in 401(k) investment menus.

Cons

There are inherently higher costs and lower returns associated with the alternative investments in question. For example, private equity firms often charge management fees around 2.5% annually, plus 20% of profits above a set threshold. By contrast, passive index funds recently averaged fees of just 0.11%.

These assets are also less liquid and harder to value. They often lack regular reporting and can be difficult to sell quickly. This potentially makes them riskier and less transparent, especially for everyday investors without the tools or experience to evaluate them.

There’s also concern of fiduciary risk. Plan administrators are legally obligated to act in participants’ best interests, including clearly communicating costs, risks, and unexpected returns.

Without clearer regulatory guidance, fiduciaries may be reluctant to include complex or high-cost options, due to potential legal exposure and a preference for simplicity.

So what are some key considerations for retirement investors?

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1. Look for low fees & long-term performance

When choosing funds for your 401(k), prioritize those with a proven track record over the long haul — typically measured in five- and 10-year periods.

Short-term performance can be misleading, while long-term results show how a fund has performed across various market conditions. Just as important are fees: high expense ratios can steadily eat away at returns, so aim for low-cost options whenever possible.

2. Increase stability and lower risk by diversifying

A well-diversified portfolio — typically a mix of stocks and bonds — can help smooth out the market’s inevitable ups and downs. Target-date and broad-based mutual funds often offer this balance automatically, adjusting the asset mix as you approach retirement.

Alternative assets can add exposure to markets not directly correlated with stocks and bonds. However, generally recommend limiting them to 5%–10% of your 401(k) portfolio, and only if you have a high risk tolerance and a strong core portfolio.

3. Understand your risk tolerance before investing

Your ideal asset mix should reflect your comfort with market volatility and your ability to absorb potential losses. Some investors can tolerate more risk because they have decades until retirement, while others may prefer stability — especially if they need funds soon.

Most 401(k) plans offer risk assessment tools or questionnaires to help you align your investments with your personal risk profile. These tools can help prevent you from taking on more risk than you’re prepared for.

4. Remember: A 401(k) can lose value

It’s important to remember that a 401(k) is not risk-free. Stocks, bonds, and other market-based assets can fluctuate depending on broader economic conditions.

Alternative investments — such as private equity or certain real estate funds — often carry even greater risks. They can be harder to value, more difficult to sell, less transparent, and more expensive to own.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.