March 30, 2026

• less than 3 min read

When you can start golfing full time might soon hinge on the earnings of OpenAI, local carwashes, and other businesses bankrolled by private credit and private equity funds. Yesterday, the Labor Department proposed a rule that’d make it easier for employer-sponsored retirement accounts to invest in alternative assets alongside stocks and bonds.

The rule is a response to President Trump’s August executive order aimed at democratizing access to private markets by reducing the legal risks associated with their inclusion in 401(k)s. Currently, these assets are available only to pro investors and large pension funds.

The $12 trillion in Americans’ 401(k)s could turbocharge growth in private markets—but critics worry the change comes as the asset class is in turmoil.

Private for the people?

The proposed rule—which has not yet been finalized—would shield employers from getting dragged to court by retirees unhappy their cash was plugged into alternative investments. Previously, a slew of lawsuits pushed 401(k) managers to stick to stock and bond funds with low fees and options to cash out quickly.

While reducing the litigation threat, the rule would still require employers to consider the funds’ performance, fees, liquidity, valuation, and complexity. Proponents of the change say that it would help workers diversify their portfolios—including through investments in innovative companies that increasingly choose to stay private.

But some experts caution that private assets aren’t a great fit for workers’ piggy banks:

• They note that private markets are less liquid than stocks and bonds, while delivering lower returns in recent years.
• Wealth Manager Josh Brown told CNBC he thinks “there’s no way” 401(k) managers can negotiate the low fees enjoyed by large investors buying into private markets.

Plus, private credit is currently floundering…as investors rush to yank their cash from these funds amid fears that AI is undermining the software companies they’ve lent to. Several funds have limited cashouts in recent weeks, adding to the perception that there is reason for concern.—SK

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