Trump Plans Executive Order to Expand Private Market Investments in Retirement Accounts

President Donald Trump is reportedly getting ready to sign an executive order that aims to broaden access to private market investments within retirement accounts. This move is being closely watched as it could significantly alter the investment landscape for many Americans.

According to sources cited by the Wall Street Journal, the order will instruct the Labor Bureau and the Securities and Exchange Commission to craft regulatory guidelines for employers and plan administrators. These guidelines will focus on how to incorporate private assets into 401(k) retirement plans. However, the specifics of the order haven’t been completed yet and will undergo administrative review before being made public.

Private market investments, often referred to as private assets, encompass various forms of assets such as private equity, venture capital, real estate, and hedge funds. Typically, these investments carry higher risk but can also offer potentially higher returns compared to traditional options like publicly traded stocks and bonds.

Bryan Corbett, president and CEO of the Managed Funds Association, which advocates for alternative asset management, has endorsed the initiative. He pointed out that expanding access to alternative investments within 401(k) plans would allow more Americans to diversify their portfolios. “By broadening access to alternative investments, we will provide more options for individuals looking to build wealth and secure their retirement,” he said.

Interestingly, the Labor Bureau had previously signaled during Trump’s first term that businesses could responsibly include stocks in certain investment products, given they adequately assess the associated risks and costs. However, this policy was reversed by the Biden administration, which declared it would not support these kinds of investments.

In light of the anticipated changes, some companies have already started to develop investment products that include private market assets. For instance, Apollo Global Management and State Street have introduced a targeted investment fund that features private market components. Additionally, Blue Owl Capital has announced plans to collaborate with Voya on offerings that will incorporate private markets for 401(k) investments.