signed an executive order<\/a> meant to accelerate the push of such funds into 401k savings accounts.<\/p>\n\u201cThe marketing machines of the large asset managers have responded rapidly to the chum in the water,\u201d said Morris, of recent efforts by the Trump administration to open $9tn in 401k funds to private equity deals. <\/p>\n
Morris said investors who had been pitched a \u201ccartoon version of private equity\u2009.\u2009.\u2009.\u2009paved with gold and high fees\u201d might not be \u201cfinancially and emotionally prepared to\u2009.\u2009.\u2009.\u2009handle a disastrous result\u201d.<\/p>\n
Top officials in the Trump administration, including Mark Uyeda, a commissioner of the Securities and Exchange Commission, have made opening up alternative investments to 401k plans a priority. <\/p>\n
Last week, Uyeda made a forceful argument to have private equity deals included in 401k plans in a speech at a conference hosted by the asset management industry\u2019s lobbying group in Washington. <\/p>\n
\u201cWhile there might be debate on what is the optimal level of exposure to private investments, what is clear is that the answer is not zero. Regulation should not presume that zero per cent exposure is inherently safer or preferable,\u201d said Uyeda.<\/p>\n
The SEC commissioner also echoed statements made by Apollo chief executive Marc Rowan that private markets offered diversification from increasingly concentrated public stock market indices, which had leveraged trillions of dollars in retirement savers to the \u201cMagnificent Seven\u201d of fast-growing technology stocks.<\/p>\n
\u201cWhile these firms have delivered strong performance, their dominance raises questions about whether passive investing can deliver the kind of diversification that is optimal for long-term retirement savers,\u201d said Uyeda. \u201cThe key metric is not nominal return, but risk-adjusted return \u2014 the return achieved per unit of risk taken.\u201d<\/p>\n
Morris, however, said private equity deals carry far more risk than public market funds, especially given his expectation of their lower net returns. <\/p>\n
\u201cWhy create yet another financial quagmire in a category where inordinate risk-taking is the strategy?\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the Private equity myFT Digest — delivered directly to…\n","protected":false},"author":2,"featured_media":287723,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4174,4175,56,54,55],"class_list":{"0":"post-287722","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-personal-finance","11":"tag-personalfinance","12":"tag-uk","13":"tag-united-kingdom","14":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/287722","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=287722"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/287722\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/287723"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=287722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=287722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=287722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}