Private Assets in 401k Plans?

More Than One-Third of Plan Participants Would Allocate Assets To Private Equity, Debt

Knowledge Gap Remains Hurdle As Half of Plan Participants Don’t Understand Benefits of Alternative Investments

According to the Schroders 2024 U.S. Retirement Survey, more than one-third (36%) of investors participating in a 401k, 403b or 457 workplace retirement savings plan would invest in private equity and private debt investments if their plan provided access to these assets. Notably, 80% of these participants say access to private investments would lead them to increase the amount they are contributing to the plan.

Among those who expressed interest in private investments, most would take a measured approach with their allocations:

• 52% would allocate less than 10% of workplace retirement assets to private assets
• 34% would allocate between 10-15% of workplace retirement assets to private assets
• 8% would allocate more than 15% of workplace retirement assets to private assets
• 6% are unsure how much they would allocate to private assets

“Alternative investments such as private equity and private debt have long served as important portfolio diversifiers in defined benefit plans,” said Deb Boyden, Head of US Defined Contribution, Schroders. “Given the evolution of the asset class in recent years, it’s a matter of when, not if, these investments will become more common in defined contribution plans.”

Adoption Not Without Challenges

Despite the growing prominence of alternative investments in recent years, half of all plan participants (51%) surveyed don’t understand the benefits of adding alternatives to their retirement portfolio, and 64% say alternative investments sound risky.

This knowledge gap among plan participants isn’t limited to alternatives, as 52% of participants report they don’t know how to manage risk in their retirement portfolio and 59% wish they received more guidance from their employer on how to invest their workplace retirement plan assets.

“Before private assets can reach their full potential, significant inroads in participant education must be made,” added Boyden.

For more information on the Schroders 2024 U.S. Retirement Survey, visit here.

About the Survey

The Schroders 2024 US Retirement Survey was conducted by 8 Acre Perspective among 2,000 US investors nationwide ages 28-79, including 780 Americans who currently participate in a workplace retirement plan (e.g. 401k, 403b, or 457 plan). The survey was conducted from March 15 to April 5 in 2024.

Note to Editors

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Schroders plc

Schroders is a global investment manager which provides active asset management, wealth management and investment solutions, with £773.7 billion (€912.6 billion; $978.1 billion) of assets under management at 30 June 2024. As a UK listed FTSE100 company, Schroders has a market capitalisation of circa £6 billion and over 6,000 employees across 38 locations. Established in 1804, Schroders remains true to its roots as a family-founded business. The Schroder family continues to be a significant shareholder, holding approximately 44% of the issued share capital.

Schroders' success can be attributed to its diversified business model, spanning different asset classes, client types and geographies. The company offers innovative products and solutions through four core business divisions: Public Markets, Solutions, Wealth Management, and Schroders Capital, which focuses on private markets, including private equity, renewable infrastructure investing, private debt & credit alternatives, and real estate.

Schroders aims to provide excellent investment performance to clients through active management. This means directing capital towards resilient businesses with sustainable business models, consistently with the investment goals of its clients. Schroders serves a diverse client base that includes pension schemes, insurance companies, sovereign wealth funds, endowments, foundations, high net worth individuals, family offices, as well as end clients through partnerships with distributors, financial advisers, and online platforms.

Important Information: All investments involve risk, including the loss of principal. The views and opinions contained herein are those of the author(s) or the individuals quoted and do not necessarily represent Schroder Investment Management North America Inc.’s (SIMNA Inc.). These views and opinions are subject to change. This communication is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument and should not be relied on for accounting, legal or tax advice. Information herein has been obtained from sources we believe to be reliable but SIMNA Inc. does not warrant its completeness or accuracy. No responsibility can be accepted for errors of facts obtained from third parties. Reliance should not be placed on the information in this document when making individual investment and/or strategic decisions.

Schroder Investment Management North America Inc. (“SIMNA Inc.”) is registered as an investment adviser, CRD Number 105820, with the US Securities and Exchange Commission and as a Portfolio Manager, NRD Number 12130, with the securities regulatory authorities in Canada. It provides asset management products and services to clients in the United States and Canada. Schroder Fund Advisors LLC (“SFA”) markets certain investment vehicles for which SIMNA Inc. is an investment adviser. SFA is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with the Financial Industry Regulatory Authority and as an Exempt Market Dealer with the securities regulatory authorities in Canada. SIMNA Inc. and SFA are wholly-owned subsidiaries of Schroders plc, a UK public company with shares listed on the London Stock Exchange. Further information about Schroders can be found at www.schroders.com/us or www.schroders.com/ca.

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