Private Equity in 401(k)s – Leveling the Playing Field or Fleecing Main Street?

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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.

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