WSJ's Take On the Week What 401(k) Investors Need to Know About Private Markets
Jun 22, 2025
Holly Verdeyen, a partner at Mercer, sheds light on integrating private investment assets into 401(k) portfolios, discussing their potential impact on long-term savings. She elaborates on how private assets differ from traditional stocks and bonds. Anne Tergesen, a retirement and personal finance reporter, shares insights on the suitability of these investments for various investors. They delve into the implications of a groundbreaking private credit ETF and the additional fees tied to private assets, emphasizing the need for careful consideration in retirement planning.
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Private Assets in 401(k) Funds
- Private market assets may be included in 401(k) target date funds as a small allocation.
- This changes liquidity dynamics and risk-return characteristics due to private assets' illiquidity.
Private Equity's Unique Return Drivers
- Private equity involves hands-on management of companies and longer investment horizons.
- Returns are driven differently from public equities, including an illiquidity premium.
Employers Unlock Private Market Access
- Employer plan sponsors enable access to private market assets that individuals normally cannot invest in.
- New product development is facilitating private asset inclusion in 401(k) plans under current policy.