Olympus Partners Founder Robert Morris has cautioned that private equity’s expansion into US 401(k) accounts could expose savers to higher fees, poor returns and increased risk, raising the possibility of future taxpayer-funded bailouts, according to a report by the Financial Times.
In a recent letter to endowments and sovereign wealth funds investing with the firm, Morris argued that private equity products tailored for retirement savers carry fee structures that make outperformance of equity index funds unlikely, while exposing individuals to losses typically borne by institutional investors.
The comments comes as managers including Apollo, Blackstone and KKR target US retirement pools for growth, supported by a recent directive from President Donald Trump aimed at accelerating private markets access to the $9tn 401(k) system.
Morris also flagged concerns that retail investors may not be equipped to absorb significant losses if deals underperform, despite aggressive marketing by large asset managers.
