Private equity firms are mounting a campaign to access trillions in retirement savings under Trump’s second term, building on regulatory changes from his first administration that opened the door to private investment in professionally managed funds.
According to the Financial Times, the $13 trillion private equity industry sees untapped potential in tax-deferred defined contribution plans like 401(k)s, which could match or exceed investments from their traditional backers, such as sovereign wealth funds, pensions and endowments.
Private funds already attracted record inflows of $120 billion in 2024, according to the Financial Times, citing data from Robert A. Stanger & Co.
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Apollo Global CEO Marc Rowan highlighted the scale of the opportunity at a company event last fall. “In the U.S., we have between $12 trillion and $13 trillion in 401(k) plans. What are they invested in? They are invested in daily liquid index funds, mostly the S&P 500, for 50 years. Why? We don’t know,” Rowan told attendees, according to the Financial Times.
The industry’s push builds on groundwork laid during Trump’s first term. In June 2020, then-Labor Secretary Eugene Scalia issued guidance permitting private equity investments within target-date funds and balanced funds. The move received support from then-SEC Chair Jay Clayton, who later joined Apollo’s board.
Private equity and non-traded real estate funds have historically been limited to institutional investors and wealthy individuals due to their higher leverage, reduced liquidity and limited disclosures compared to traditional investment vehicles.
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Industry executives told the Financial Times the proposed deregulation would effectively double the demand for private capital funds.
Some industry leaders express concerns about retail investors’ ability to evaluate complex private investments. They suggest professional fiduciaries, rather than individual investors, should direct retirement funds into private markets.
Drew Maloney, who leads the American Investment Council, the industry’s main lobbying group, told the Financial Times that the group plans to advocate for “a pro-growth regulatory regime that supports small businesses and provides more opportunity to everyday investors.”
The private equity industry anticipates a more favorable regulatory environment under Trump than the Biden administration’s heightened scrutiny of private dealmaking and push for increased disclosures.
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