Alternative investments have long been the domain of the ultra-wealthy, institutions and government pensions. Now, the Department of Labor is asking: Why not everyone else? The DOL’s Employee Benefits Security Administration proposed new guidance Monday aimed at making it easier for 401(k) plans to include alternatives by reducing regulatory burdens and limiting litigation risks for fiduciaries. “This is how we will unlock and unleash the full potential of America’s voluntary employee benefit system,” EBSA Assistant Secretary Daniel Aronowitz said during a media event Monday. He emphasized that the agency is not endorsing specific assets but seeking to “level the playing field” and broaden investment options.
Asset managers and industry groups have pushed for this shift, arguing that private equity, private credit, crypto and other alternatives can offer diversification and stronger long-term returns. Some firms are already rolling out semi-liquid funds tailored for defined contribution plans. Still, demand from everyday investors may be overstated. “I’m never going to say there’s zero people asking for this, but I think the marketplace for it is small,” said Robert Massa, managing director at Prime Capital Financial.
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