The US PE industry, via the American Investment Council, is gearing up to push the incoming Trump administration for expanded access to individual retirement savings, potentially unlocking trillions of investment dollars for its funds, according to a report by the Financial Times.
Industry leaders hope to revive and expand a deregulatory effort from Donald Trump’s first term, which allowed private equity investments to be included in professionally managed retirement accounts like target-date funds. Now, private equity firms are seeking permission to directly tap tax-deferred defined contribution plans, such as 401(k)s, for investments in leveraged buyouts, private loans, and illiquid real estate deals.
Currently, private equity and non-traded real estate funds are primarily available to institutional investors and wealthy individuals due to their high leverage, limited liquidity, and lack of transparency compared to traditional mutual funds and ETFs. But executives believe that gaining access to 401(k) plans could double demand for their funds.
Marc Rowan, CEO of Apollo Global Management, has described the $12-$13tn held in US 401(k) plans as a major opportunity. At a recent Apollo event, Rowan criticised the concentration of retirement investments in index funds, saying: “We’ve effectively levered the entire retirement of America to Nvidia’s performance. It doesn’t seem smart.”
Rowan argued that offering private equity as an option for retirement savers would diversify portfolios and reduce over-reliance on daily liquid index funds like the S&P 500.
American Investment Council head Drew Maloney has emphasised the need for a “pro-growth regulatory regime” that supports small businesses while offering broader investment opportunities to average savers.
