All Americans Should Have Access to Private Investment

AIC President and CEO Will Dunham released the following statement regarding President Trump’s Executive Order to democratize access to alternative assets for 401(k) investors: 

“For decades, public pension funds have invested in private assets because they deliver strong returns over the long term and are a smart, safe way to diversify retirement savings.  President Trump’s EO is a great step that will help all Americans enjoy the same benefits of stronger returns and a secure retirement.”

All Americans Should Benefit from Private Equity’s Robust Returns in their 401(k)s

Working hard and saving for retirement is a core pillar of the American dream. More than half of all private sector workers are invested in a 401(k) plan, and tens of millions more have benefited from this system since it was first established by Congress in the 1970s.

But 401(k) plans and our retirement system can work even better. More than a third of retirees are considering going back to work because they lack the savings and 70% of retirees wish they had started saving earlier. 

For decades, public pension funds have invested in private assets because they deliver strong returns over the long term and are a smart, safe way to diversify retirement savings. President Trump’s recent Executive Order allowing Americans to invest in private assets through their 401(k)s is a great step that will help all Americans enjoy the same benefits of stronger returns and a secure retirement.

Higher Returns Help Americans Build More Wealth

Private assets have historically generated higher returns than public markets and other asset classes, even when accounting for fees. In 2024, private equity investments delivered a median annualized return of 13.5 percent over a 10-year period. Every year since 2012, AIC has found that private equity is the best-returning asset class for public pension portfolios.

More than 89 percent of public pension funds invest a portion of their portfolio in private equity, and these returns have benefited more than 34 million public servants. If private equity is good enough for first responders and schoolteachers, why shouldn’t every American have access to private equity’s superior returns for their retirement? 

Some top-performing public pension funds based on their private equity returns include:

• The Vermont Pension Investment Commission – 18.82%
• West Virginia’s Investment Management Board – 17.03%
• Massachusetts Pension Reserves Investment Trust – 16.88%
• Iowa Public Employees’ Retirement System – 15.99%
• The Florida Retirement System – 15.81%

Provides a Critical Source of Diversification

Private equity and private credit would provide Americans with a stable source of diversification during periods of economic downturn, since private asset returns aren’t directly correlated with stocks and bonds. A study published by Cambridge Associates also found that over the last decade, “institutions with higher private investment allocations experienced higher returns historically. And, those returns tended to be less volatile.”

Modernizing Investment Opportunities

Employers and fiduciaries have been discouraged due to abusive litigation fueled by outdated regulatory burdens from offering employees 401(k) plans the compelling returns and diversification provided by private equity and other alternative investments. The Executive Order makes clear that the Department of Labor should provide whatever is necessary, from guidance to formal rulemaking, to enable every-day Americans to enjoy enhanced investments in their retirement portfolios without fear of frivolous lawsuits.

Access to More Dynamic, Fast-Growing Private Companies

In 1996, there were more than 8,000 publicly traded companies in the U.S. Today, that number has been cut in half. More companies are choosing to stay private to prioritize long-term growth instead of having to answer to quarterly earnings reports. This Executive Order allows average investors to access the many dynamic and fast-growing startups that choose to stay private.

AIC Supports Efforts to Expand Access to Private Assets

Private assets are a critical component of almost every public pension plan in the U.S., consistently delivering outsized returns and providing options for diversification during times of economic uncertainty. Historically, only the wealthiest Americans and large institutional investors including public pension funds, university endowments, and non-profit organizations could invest in private equity.

This Executive Order democratizes retirement saving and gives every American the freedom and choice to invest in and benefit from private equity’s strong record of robust returns.

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