Should defined contribution plans include private equity investments?

Tuesday December 1, 2020


Investors want access to the best performing assets for their portfolios. Driven by the strong performance of private investment funds in recent decades, many providers of defined-contribution (DC) investment services have advocated for broader access to private investments in these plans, such as 401(k)s. Inclusion of private funds in DC plans could potentially provide better investment portfolios for investors and at the same time benefits for providers (e.g., potential for higher management fees). But, can access to private funds really occur given operating and regulatory/legal constraints? Perhaps more importantly, should this happen? Or more specifically, what is the evidence suggesting that gains from investing in private funds are likely to accrue to retail investors? In this analysis we draw on existing research to shed light on these questions.