On August 7, President Donald Trump signed an executive order (Democratizing Access to Alternative Assets for 401(k) Investors) that has been widely – and mistakenly – reported to open 401(k) plan assets to “alternative asset” investments, including private equity (PE) and venture capital (VC) vehicles, such that a flood of new capital will be available for such investments (see this related fact sheet).
While 401(k) and other defined contribution (DC) savings plans (as opposed to defined benefit pension plans) may eventually offer participants an opportunity to invest more widely in alternative assets – i.e., assets beyond the conventional mix of publicly traded mutual funds, stocks, bonds and collective investment trusts (CITs) that now dominate the investment mix of DC plans – any such change will not result solely from the executive order and likely will take considerable time to crystallize in any broad-based form. However, the order may serve as a robust catalyst for that process. This alert focuses particularly on what alternative asset sponsors like PE and VC funds should know now.
The authors
Michael Bergmann
Stacey Bradford
Steve Flores
