Private equity is eyeing your 401(k) plan

A financial advisor points at a computer as a man and woman on the other side of the table smile and look at each other. (Credit: Alvaro Gonzalez—Getty Images)

• Private equity firms are having trouble obtaining new capital from institutional investors, but Americans have $12 trillion in 401(k)s and similar retirement plans. Amid a strong lobbying push from the industry, however, skeptical academics like Jeffrey Hooke at Johns Hopkins argue returns from these funds’ risky and highly illiquid investments are often not all they’re cracked up to be.

Private equity has its eyes set on a $12 trillion frontier: retirement plans. The promise of outsized returns has lured pension funds, the ultra-rich, and other big institutional investors for decades, but new research from Johns Hopkins warns the private markets aren’t a good fit for the savings of ordinary Americans.