Why BlackRock is reportedly making a private asset 401(k) push

00:00 Speaker A

BlackRock, the world’s largest asset manager, plans to provide public and some private data for a 401k target date fund offered by Great Gray Trust, that’s according to the Wall Street Journal. This comes as BlackRock is pushing to bring retail investors into the private market with its own funds becoming available for 401k plans starting the first half of 2026. I still have Thomas Hayes, Great Hill Capital chairman and managing member with me here. And as we’re taking a look at shares of BlackRock, they’re up by about 1% here on the day. Is this really expected to move the dial longer term here? Why does it make sense for BlackRock to do this?

01:05 Thomas Hayes

Yeah, I I think they’re doing it because they can. Okay? It’s a huge market. The idea is to democratize private equity, but you see they follow the trends. You know, first, Larry Fink said, uh, Bitcoin was no good, and then the thing took off, and then he started offering it to the public with the ETFs, etc. So, I I do think that there is going to be a place. This is going to be promoted by a lot of financial advisors. This is going to be a part of the portfolio. The beauty of private equity and private credit, which has become so popular, is that you have, uh, no mark-to-market. So it’s perceived low volatility because they mark the assets, what we used to say during the Great Financial Crisis, mark to make believe or mark to whatever. And you never really see a mark until the asset is worth zero until it’s fully marked down. So, in a bull market like this, everything’s marked up. Everyone’s happy. There’s no volatility. You don’t see that daily volatility. Retail loves that. Institutions, institutional consultants love not having the volatility. They love their sharp ratios when they come in with the 25-year-old with their clipboard. Uh uh, but when you take the marks, the marks are big. So I I think there’s going to be a place for this in in a lot of 401Ks, and and for a lot of retail investors are going to try their hand. But as you move into a recessionary type of period, these are the assets that you want to be careful of.

03:46 Speaker A

Yeah, I was taking a look at one of the charts from Torsten Slok, Apollo Chief Economist, saying private equity as a percentage of public equity market 2003, 3.8%, 2024, 8.8%. That’s some of the growth here that we’ve seen. Tom, it’s been great to have you here on set with us. Thomas Hayes, who is, uh, of Great Hill Capital and taking some time here in New York with us.

04:11 Thomas Hayes

Thank you so much. Thanks for having me.