Empower announced Wednesday that it is partnering with several firms to offer alternative investments within defined contribution plans—a topic that has gained more attention since President Donald Trump’s 2024 election victory.

Empower has partnered with several private investments fund managers and custodians, including Apollo, Franklin Templeton, Goldman Sachs, Neuberger Berman, PIMCO, Partners Group and Sagard, to bring private investments to the 401(k) market.

‘Democratizing Alternative Investing’

The private investments can be implemented through collective investment trusts, which will provide limited exposure to “diversified pools” of private equity, private credit and private real estate, according to Empower. The firm has said it believes this is a structure that will provide liquidity protection and reduced fee exposure.

According to a spokesperson at Empower, participants will pay investment expenses associated with the private fund just like any mutual fund or CIT. These fees depend on the actual private fund selected by the plan. The private market allocations will only be part of a participant’s overall portfolio, so the firm expects the actual expense impact to be minimal.

The fees can range from 1% to 1.6%, but the allocation to private investments would generally be no more than 10% of the participant’s overall allocation, the spokesperson said.

As part of the initiative, Empower is requiring employers to work with an adviser to offer these investments through a managed account platform created in conjunction with Empower. The managed account requirement is intended to match the investment with an individual’s risk tolerance and long-term financial goals, according to the announcement.

This access to private investments is intended to complement existing investment choices available in a plan’s investment menu.

“Empower is making a profound move on behalf of American retirement investors who should have the ability to invest in an asset class that has the potential to diversify their portfolios and offer opportunities for returns in new ways,” Empower president and CEO Edmund F. Murphy III said in a statement. “Like any investment, we believe in the importance of advice and risk mitigation for every investor. These new opportunities offered under an advice model deliver the guardrails necessary to help an entirely new investor class access private investing.”

Other asset management firms have also begun to offer products that include access to private investments. Last month, State Street Global Advisors launched a target-date series that includes a 10% exposure to a blend of private assets managed by Apollo. The funds are also structured as CITs and include access to private credit, private equity and real assets.

Fidelity Investments began offering a CIT-based TDF series with a 5% allocation to private real estate in October 2023, and Neuberger Berman began offering a TDF with Lockheed Martin Investment Management Co. that included a private equity co-investment sleeve in July 2024.

Is There Demand?

Jason Kephart, senior principal of multi-asset strategy ratings for Morningstar, says in 2020 the . But Kephart says there has not been much movement on this until recently.

What remains to be seen, Kephart says, is how much demand there is for these products on the plan sponsor side, and how much of the push for private assets in 401(k) plans is just coming from asset managers trying to break into the TDF marketplace.

“If you look at the top five target-date fund providers, it’s really hard to crack the top five,” Kephart says. “…I think to break into the target-date space, you really need to have something that’s really differentiating.”

He notes that there was more of a focus last year on pushing for lifetime income in retirement plans, and now there is more of a focus on differentiating with private assets. As there still has not been widespread implementation of in-plan guaranteed income solutions, Kephart believes adoption of TDFs with private assets will likely be slow as well.

“Even if you want to switch from Vanguard to BlackRock’s normal target-date fund, it’s still a multi-quarter process,” Kephart says. “I think to underwrite private investments as part of that, and then get comfortable with fees and the structure, the liquidity… all of that is going to take a much longer time. So even though I think every asset manager is getting ready to be able to offer this … it’s still not clear to me that there is a lot of pent-up demand for these kinds of assets.”

He also argues that while private assets have the potential to generate more growth in investors’ portfolios, he does not believe their inclusion will help make up for lost time if participants are not starting to save early in their careers.

“I don’t think it’s a silver bullet for retirement savers,” Kephart says.

Empower administers more than $1.8 trillion in assets for 19 million investors through its retirement plans, advice services, wealth management and investments.