Nearly half (45 per cent) of U.S. capital accumulation plan members say they’d invest in private equity and private debt investments if their plan provided access to these assets, up from 36 per cent in 2024, according to a new survey by Schroders.
The survey, which polled more than 1,500 plan members, found among employees who would invest in private assets, half (51 per cent) said they’d allocate less than 10 per cent of their workplace retirement assets to private assets, while 36 per cent would allocate between 10 per cent and 15 per cent and six per cent would allocate more than 15 per cent.
Notably, while 78 per cent of plan participants said private assets can enhance 401k portfolios through diversification and 73 per cent believe private assets provide the opportunity for greater investment return, more than half (53 per cent) said private assets sound risky.
Further highlighting the need for more education, just 12 per cent of plan participants said they consider themselves very knowledgeable about private assets, while 40 per cent said they’re somewhat knowledgeable, 30 per cent said they aren’t too knowledgeable and 18 per cent said they aren’t at all knowledgeable.
Despite this growing demand, fewer than a third (30 per cent) of plan members expect private assets to be available in their retirement plan within the next five years, while 47 per cent said they’re unsure and 23 per cent don’t anticipate their plan menu will include private asset investments before 2030.
“For decades, traditional pension plan portfolios have mixed public and private investments in the same portfolio to meet their obligations to retirees,” said Deb Boyden, head of U.S. defined contribution plans at Schroders, in a press release. “On the heels of the recent executive order directing the Labor Department to consider improving access to alternative assets for defined contribution retirement plan participants, a wider range of employees may soon be able to combine the benefits of both asset classes to better prepare for retirement.”