Private Equity in 401(k)s – Leveling the Playing Field or Fleecing Main Street?
Retirement Daily Guest Contributor
In a recent announcement, the Department of Labor now explicitly allows allocations of up to 15% to private equity (PE) inside of a target-date fund in 401(k) plans. For the profession, this is a polarizing development. For the 401(k) participant, it’s an added complexity for their retirement savings plan.
Even detractors of private equity will admit that as a tool in the financial toolbox, it adds a correlation and diversification benefit to target-date portfolios. Simply put, private equity does not perform in line with traditional stock and bond investments.