Roughly $14 trillion is invested in American defined-contribution retirement plans. For most of the past four decades, very little of that money has gone into private markets.
Over the past year, policymakers have begun reconsidering that divide.
On August 7, 2025, Executive Order 14330, titled “Democratizing Access to Alternative Assets for 401(k) Investors,” directed the Secretary of Labor to reexamine fiduciary guidance surrounding alternative assets and consider rules that could include appropriately structured safe harbors. Five days later, the Department of Labor rescinded a 2021 statement that had cautioned plan sponsors about including private equity in retirement plans.
The proposed rule arrived on March 30, 2026, titled “Fiduciary Duties in Selecting Designated Investment Alternatives.” Its public comment period closed June 1 after the Department received 44,906 comments.
New investment products followed soon afterward.
For David Fiszel, founder and chief investment officer of Honeycomb Asset Management, the policy debate addresses a problem he has long discussed: some of the fastest-growing companies in the economy are staying private longer, leaving ordinary investors with limited opportunities to participate in that growth.
Where Fiszel differs from the direction Washington is taking is in how that problem should be addressed.
The Problem as Fiszel Sees It
Fiszel’s argument has two parts.
The first concerns access.
“There are so many terrific massive private companies that are not in the S&P 500 which are growing incredibly fast,” he said in 2026. “I am just concerned that the average investor gets left behind.”
As he put it more simply elsewhere, “Not everybody gets to participate in that.”
The second part concerns what those same investors already own.
“I am concerned that those invested passively in the market, including their retirement 401(k)s, may not realize they are owning 400 companies of the S&P 500 that will be disrupted by AI,” Fiszel said.
The figure is a rhetorical estimate, not a measured statistic, but his broader concern is consistent with the argument he has made about public and private markets.
Millions of Americans rely on broad public-market index funds for retirement. At the same time, many companies at the center of artificial intelligence development have remained private through periods of significant growth. That can leave retirement investors with substantial exposure to established public companies that may face disruption while giving them limited access to some of the private companies driving that disruption.
Fiszel sees another potential consequence.
“While I’m bullish on AI overall, the dual impact of potential job losses for those very people relying on their future retirement accounts that may be impacted is a compounding issue that requires some proactive thinking,” he said.
In other words, the effects of AI may not be confined to an investor’s portfolio. If the technology also affects employment or wages, some workers could experience changes to their current income at the same time they’re relying on retirement investments that may be exposed to many of the businesses being disrupted.
That makes the question of access more complicated than simply whether investors are missing potential returns.
What Washington Is Proposing
The Department of Labor’s proposed safe harbor would require a fiduciary selecting an investment alternative to consider six factors: performance, fees, liquidity, valuation, benchmarking, and complexity.
If those requirements are satisfied, the fiduciary’s judgment “is presumed to be reasonable and is entitled to significant deference.”
The proposed rule also leaves notable gaps. It doesn’t establish a percentage cap for alternative investments or impose a minimum liquidity requirement. The safe harbor applies to the initial selection decision, while the fiduciary’s ongoing responsibility to monitor the investment remains.
Investment firms have already begun developing products that incorporate private assets into retirement portfolios.
BlackRock supplied the custom glidepath for Great Gray Trust’s Panorix target-date series, announced in June 2025 and launched that fall. Depending on an investor’s age, the series allocates between 5 and 20 percent to private markets, with an average all-in cost of 42.2 basis points.
State Street’s Target Retirement IndexPlus includes a 10 percent private-market allocation managed by Apollo. Empower, Blue Owl with Voya, and Capital Group with KKR have introduced their own variations.
BlackRock chief executive Larry Fink has been one of the most prominent advocates for expanding access.
“Assets that will define the future – data centers, ports, power grids, the world’s fastest-growing private companies – aren’t available to most investors,” he wrote in his 2025 chairman’s letter.
Fink suggested that the traditional stock-and-bond portfolio could eventually evolve into something closer to “50/30/20, stocks, bonds, and private assets.”
Apollo chief executive Marc Rowan has raised a related concern about the concentration of public markets.
“Asset managers have leveraged the future of retirement to four stocks,” he said at a 2024 industry conference. “In hindsight this will have been an irresponsible thing for us to have done.”
That concern overlaps with Fiszel’s argument. The difference is what each approach asks retirement investors to do.
The Trade-Offs of Putting Private Assets in Retirement Plans
Expanding access to private markets may solve one problem while introducing others. Three issues are particularly important: fees, performance, and liquidity.
Private equity has historically been considerably more expensive than passive public-market investing. Traditional private equity funds commonly charge management fees of 1.75 to 2 percent along with 20 percent carried interest. By comparison, index equity mutual funds averaged 0.05 percent in 2025, while 401(k) participants paid an average of 0.26 percent for equity mutual funds in 2024.
Senator Elizabeth Warren has argued that private funds “often charge up to 20 times as much in fees as mutual funds,” a comparison supported by those traditional fee structures.
The retirement products now being developed complicate that comparison.
Panorix, for example, has an average all-in cost of 42.2 basis points, only moderately higher than the 27-basis-point industry average for target-date mutual funds. Packaging private investments within a larger fund can therefore make the cost retirement savers experience much lower than the headline fees associated with a conventional private equity fund.
The more useful question is whether any additional cost produces enough additional return to justify it.
The performance record is mixed depending on the period being measured.
Cambridge Associates data through September 30, 2025, showed U.S. private equity returning 8.31 percent net over one year compared with 24.02 percent for a public-market equivalent. Over five years, the figures were 14.08 percent and 15.02 percent, respectively.
Private equity moved slightly ahead over ten years, returning 14.99 percent compared with 14.68 percent. Over 20 years, the gap widened, with private equity returning 13.40 percent versus 9.57 percent.
That longer-term performance can support the case for including private assets in a retirement portfolio designed to compound for decades. But actual investor behavior creates another consideration. Vanguard research has found that the median holding period for a target-date fund is roughly four years.
Liquidity creates a more practical challenge.
Morningstar’s February 2026 analysis found that semiliquid private-market vehicles operating inside daily-valued retirement plans could require liquidity reserves as large as 40 percent to handle normal participant activity and periods of market stress.
“Outflows tend to cluster,” the report noted, “meaning consecutive small withdrawals can rapidly drain liquidity buffers.”
That creates a difficult balance. A retirement fund may advertise a 10 or 20 percent allocation to private investments while also needing to maintain substantial liquid reserves so participants can continue buying, selling, and moving their money normally.
Manager selection matters, too.
Vanguard’s Fiona Greig has estimated that a 10 to 20 percent private-market allocation could increase cumulative retirement wealth by 7 to 22 percent net of fees over a 40-year period. But she attaches important conditions to that finding.
“Private assets require access to top managers, an appetite for risk, and a long investment horizon,” Greig said.
Vanguard’s research also found manager dispersion of 26 percentage points in private equity, compared with seven percentage points among active public-market funds.
That makes access itself only part of the problem. Which private investments a retirement plan can access may matter just as much.
Fiszel Would Address the Access Problem Differently
Fiszel agrees that ordinary investors are missing some of the growth taking place in private markets. His preferred solution, however, starts with the companies themselves.
“It doesn’t have to be the status quo,” he said. “The companies need to take the risk that the IPO market is open and the indexes can adapt.”
His argument is that more large private companies should enter the public market earlier.
If that happens, investors don’t need a separate private-market allocation in their retirement plans to gain exposure. Once those companies become publicly traded and qualify for major indices, the index’s composition can change with the economy.
That approach also preserves many of the characteristics that have made index funds attractive retirement vehicles in the first place: relatively low fees, daily pricing, and greater liquidity.
The Department of Labor’s proposal approaches the same access problem from the other direction. It would make it easier for retirement plans to incorporate private assets.
The distinction has practical consequences. Adding private investments to a 401(k) depends on an employer choosing an appropriate product, a recordkeeper supporting it, and plan fiduciaries being comfortable with the investment and its risks.
Encouraging more companies to go public changes what can eventually become part of the index millions of investors already own.
The IPO Market Is Beginning to Test That Idea
Developments in 2026 have provided an early test of Fiszel’s argument.
SpaceX went public in June at a valuation of roughly $1.77 trillion, completing the largest IPO in history. Anthropic and OpenAI both filed that same month confidentially.
Those developments suggest that some of the largest private technology companies are beginning to consider public markets.
But the details show why the access question hasn’t disappeared.
SpaceX’s free float on its first day of trading was approximately 4 percent of shares outstanding. Because major indices generally weight companies according to free float, public investors initially received much less exposure than the company’s headline valuation might suggest.
Anthropic’s valuation increased from $183 billion to $965 billion in nine months while it remained privately held.
OpenAI raised capital at an $852 billion valuation and has made clear that a public offering may not happen quickly.
“We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company,” OpenAI said.
These examples reflect the same structural change Fiszel has been pointing to. Companies can now raise enormous amounts of capital privately, reducing financial pressure to enter public markets early in development.
The $14 Trillion Question
Private markets still represented less than 1 percent of defined-contribution industry assets as of March 2026, so these changes have had relatively small practical effects so far.
The legal environment is also evolving. The Supreme Court is scheduled to hear Anderson v. Intel Corporation Investment Policy Committee on October 6, 2026, a case about whether participants alleging imprudence based on fund underperformance must plead a meaningful benchmark. The case arose from Intel’s use of alternative investments in its target-date funds, and its outcome could affect how employers and fiduciaries evaluate the legal risks of adding those investments.
The larger question isn’t simply whether private assets should be allowed inside a 401(k). It’s how ordinary retirement investors can access companies that increasingly spend their fastest-growing years outside public markets.
One possibility is to bring private assets into the retirement products investors already use. That could expand access, but it also introduces questions about fees, liquidity, valuation, manager selection, and how those investments behave inside a vehicle expected to provide daily access.
Fiszel’s preferred approach addresses the issue earlier. He wants more companies creating significant value in private markets to go public while more of that growth still lies ahead.
The IPO activity of 2026 suggests some companies may be moving in that direction, although many are still reaching extraordinary valuations before doing so.
That’s what connects this debate to the broader argument Fiszel has been making about public and private markets. His concern isn’t simply that investors need more investment choices. It’s that the companies available to ordinary investors have changed, while the way millions of Americans save for retirement largely hasn’t.
Whether the answer is to put more private assets into 401(k)s or give public investors earlier access to private companies will shape who gets to participate in the next generation of growth. For Fiszel, the better solution is to make more of that growth available through the public markets investors already own.
