The Trump administration on Monday took its first step in opening the more than $10tn US retirement marketplace to complex and illiquid private markets deals such as corporate takeovers and direct loans, as it pushes forward with an executive order issued by the president last summer.
The Department of Labor, a US agency that oversees the regulation of US retirement plans such as popular tax-deferred 401k savings accounts, said on Monday it would offer administrators of retirement plans like large asset managers a “process-based safe harbour” when selecting alternative investment options for ordinary savers so long as they considered factors to safeguard investors.
The new rule could help open savings plans to private equity deals and private credit loans. However, it comes amid turmoil in private markets as buyout deals have struggled to exit a $4tn stockpile of investments and reported lacklustre returns, while private credit funds for wealthy individuals have seen a recent explosion of redemption requests that has forced some funds to restrict withdrawals.