Private Equity Abuzz Over Access to $6 Trillion 401(k) Market

The Trump administration has cracked open the door for private equity funds to get into 401(k) workplace retirement plans. There’s roughly $5.6 trillion in such accounts, and the prospect of capturing even a sliver of it has the industry abuzz. A more complicated question is whether ordinary investors will really want their money going into buyout funds.

Private equity is a different beast from the mutual funds retirement savers are familiar with. PE managers often buy companies whole, financing the purchase with debt that ends up on the books of the companies themselves. That adds to potential profits but also to risk and complexity. Funds tend to have long lockup periods, during which investors can’t get their money out, and charge high management fees as well as take a share of profits off the top.