WASHINGTON (dpa-AFX) - The U.S. Department of Labor has put forth a new rule to make it easier for retirement plans at workplaces to add higher-risk alternative investments like private equity, private credit, real estate, and cryptocurrencies.
This move follows an executive order from Donald Trump and is intended to lessen the legal risks that employers and plan sponsors might face when they want to include these options in 401(k) investment selections.
Officials noted that fiduciaries will still have to adhere to a careful review process as outlined in the Employee Retirement Income Security Act of 1974. This involves looking closely at aspects like fees, liquidity, complexity, and performance before giving a thumbs-up to any such investments.
Proponents believe that these alternative assets could enhance diversification and boost returns, while critics caution that they come with higher fees, less transparency, and increased liquidity risks for those saving for retirement.
Big names like BlackRock, Apollo Global Management, and State Street Global Advisors are already working on retirement products that merge traditional funds with exposure to private markets.
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