This isn’t quite as bad as it sounds, but its still something I think should not happen.
Its not that private equity firms are going to reach into your 401k and take your money. What they want is for their private equity offerings to be offered right along side of the publicly traded stocks and mutual funds you have offered to you today.
They want you to have the choice to invest in their much riskier, less regulated, investments, but even if that choice happens, they can’t force you to give them your money.
“The biggest trend in our industry is investors, individual investors, and institutional investors looking at their fixed income bucket and saying to themselves, why is this 100% public?”
Because there are rules in place to protect investors in public companies. There are disclosure requirements that public companies have to do which adds transparency that private companies don’t. Investments made in public stocks can be traded any time and you can exit an investment immediately if you’re willing to take what the market will pay today. There is recourse public shareholders have against a company. They can sue. Not so for private investments which can lock up your money for whatever their rules say.
Besides all the reasons above, allowing private investment with 401k money is like letting people buy Bitcoin with their retirement savings. It a huge huge gamble, and that isn’t what retirement savings is for. If you want to spend your non-retirement money on risky bets like private equity, Bitcoin, or “everything on red” in Vegas, that’s what your non-retirement money is for.
Also, no individual investor is saying what this guy says. Folks that have enough money to invest in private equity are doing so outside of the their 401k.
Perfect example: you hear about Elon Musk getting sued by Tesla investors for his actions in the company. You never hear that about SpaceX, Boring Company, Neurolink, etc. Why? Of his companies only Tesla is publicly traded. All the others they aren’t required to give any power to their stock holders.
This isn’t quite as bad as it sounds, but its still something I think should not happen.
Its not that private equity firms are going to reach into your 401k and take your money. What they want is for their private equity offerings to be offered right along side of the publicly traded stocks and mutual funds you have offered to you today.
They want you to have the choice to invest in their much riskier, less regulated, investments, but even if that choice happens, they can’t force you to give them your money.
Because there are rules in place to protect investors in public companies. There are disclosure requirements that public companies have to do which adds transparency that private companies don’t. Investments made in public stocks can be traded any time and you can exit an investment immediately if you’re willing to take what the market will pay today. There is recourse public shareholders have against a company. They can sue. Not so for private investments which can lock up your money for whatever their rules say.
Besides all the reasons above, allowing private investment with 401k money is like letting people buy Bitcoin with their retirement savings. It a huge huge gamble, and that isn’t what retirement savings is for. If you want to spend your non-retirement money on risky bets like private equity, Bitcoin, or “everything on red” in Vegas, that’s what your non-retirement money is for.
Also, no individual investor is saying what this guy says. Folks that have enough money to invest in private equity are doing so outside of the their 401k.
Perfect example: you hear about Elon Musk getting sued by Tesla investors for his actions in the company. You never hear that about SpaceX, Boring Company, Neurolink, etc. Why? Of his companies only Tesla is publicly traded. All the others they aren’t required to give any power to their stock holders.
Yeah I was terrified of the headline at first, but after reading the article came to the same basic conclusion as you.
At first I thought they were going to find a way to trade our 401(k)s without our consent like the mortgage-backed securities from pre-2008.