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Private-Equity Wants a Piece of Your 401(k)

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Comments

  • edited May 19
    Jason Zweig believes alternative assets do not belong in 401(k)s.

    "Whether we’re talking about a smaller firm like Redwood or the giants of alternative investing,
    the same rule applies: Assets that don’t trade every day aren’t low risk just because they don’t trade every day.
    And, until costs come down and conflicts of interest are ironed out, stuffing private assets inside a fund
    that does trade every day is a rotten idea for retirement savers."


    https://www.msn.com/en-us/money/savingandinvesting/this-new-investing-idea-isn-t-right-for-your-retirement-plan/ar-AA1EUSqV
  • Jason Zweig believes alternative assets do not belong in 401(k)s.

    "Whether we’re talking about a smaller firm like Redwood or the giants of alternative investing,
    the same rule applies: Assets that don’t trade every day aren’t low risk just because they don’t trade every day.
    And, until costs come down and conflicts of interest are ironed out, stuffing private assets inside a fund
    that does trade every day is a rotten idea for retirement savers."


    https://www.msn.com/en-us/money/savingandinvesting/this-new-investing-idea-isn-t-right-for-your-retirement-plan/ar-AA1EUSqV

    Other than TIAA RE, which has proven itself over the years, I think Jason is spot-on correct, as I mentioned earlier. The average person is not in a position to research (or understand) the nuances and intracasies of illiquid investments ... heck, most people have no idea about things like 'fundamentals' or 'moats' or whatnot when it comes to just buying *stocks*.
  • Bloomberg news ran an article yesterday ( which of course I can't find now) pointing out the fact that this push for PE in Retirement funds comes just as PE returns have crashed, it has become enormously "popular" with consequent lower returns as many PE funds don't know what they are doing, and many University endowments are selling PE because either they need liquidity or it has not preformed

  • edited May 20
    ”Bloomberg news ran an article yesterday …”

    Article - Possibly what you’re referencing

    :image
  • edited May 20
    Jeffrey Ptak from M* discovered that the Redwood Private Real Estate Debt interval fund
    recorded a loss on just three days since its June 2023 inception.
    This fund gained 7.2% a year from 07/01/2023 - 04/30/2025 with a standard deviation of just 0.5%!
    Only thirteen OEFs/ETFs had a higher Sharpe Ratio (4.0) over this time period.
    As it turns out, seven other interval funds (out of 79 total) delivered a higher Sharpe Ratio
    than the Redwood fund during the same period.
    Are some interval funds too good to be true?
    Caveat emptor!

    https://jeffreyptak.substack.com/p/what-new-sorcery-is-this
  • edited May 28
    Jeff DeMaso from The Independent Vanguard Adviser recently wrote about private investments.
    Everyone can read part of this article but the entire article can only be read by paying subscribers.

    Executive Summary: Private markets are being pitched as the next frontier for everyday investors—
    with Vanguard now joining the push. But don’t believe the hype.
    Alternative investment funds are expensive, opaque and illiquid.
    Their risk-reducing qualities are oversold.
    And unless you have access to the best managers,
    private investments are more likely to add complexity to your portfolio than improve performance.

    https://www.independentvanguardadviser.com/do-you-really-need-private-investments/
  • edited May 28
    Obs "This fund gained 7.2% a year from 07/01/2023 - 04/30/2025 with a standard deviation of just 0.5%!"

    FD: Welcome to my world:-)
    Take a look at HOSIX, the volatility is minimal = 1.2, performance at 9.8% annually.

    https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=17HLSk91w93309cdcjzCe5
  • Moody's says watch out. Per Reuters:

    The rapid growth in retail investors, who put their money into private markets, could create liquidity and asset quality risks, Moody's Ratings warned on Tuesday, highlighting potential vulnerabilities within the private credit sector.

    /snip

    the shift is also raising concerns about transparency, liquidity, and underwriting standards, as firms race to deploy capital amid limited supply of high-quality assets.
    Let's see, limited supply, and yet everybody now wants to retail it. Hmmm.

  • edited September 28
    Barron's RETIREMENT & WELL BEING (online). The SEC panel on including private-equity/credit (p-e/c) within retail funds and retirement 401k/403b has made several recommendation (28-page report): avoid self-standing p-e/c offerings; include p-e/c within allocation/hybrid funds and TDFs; different restrictions in retirement and nonretirement accounts; any redemption restrictions may be similar to interval-funds but with monthly redemptions at higher %AUM; revision of the definition of “accredited investors”; more disclosures and investor education.
    (Subscription) https://www.barrons.com/articles/sec-private-assets-retail-investors-1d83d3cd
    SEC, 28-pg Report https://www.sec.gov/files/iac-private-markets-091125.pdf
  • Thanks! I couldn't find it using the usual tricks.
  • edited September 28
    “There is investor demand for these products,” said SEC Chair Paul Atkins at last Thursday’s meeting.
    “But, we also must have appropriate guardrails.”


    Is there widespread public demand for private investments or are firms just seeking additional markets
    to offset the lack of enthusiasm from institutional investors?
  • Excerpt from Barrons article,
    One last caution from the committee related to retirement assets. Nearly a third of accredited investors today count their retirement funds toward the wealth test. Less wealthy investors might be less able to endure the loss of retirement money, so the SEC should examine whether retirement funds should be excluded from counting toward retail investors’ qualifying for private investing.
    PE, if pass, are for accredited investors, i.e. high net worth individuals.
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