The Impact of President Trump's Executive Order on Private Equity Access

In September 2025, President Donald Trump signed an executive order aimed at facilitating access to alternative investments, such as private equity and private credit, within workplace retirement plans like 401(k)s. Proponents argue that this move will democratize investment opportunities that have traditionally been available only to wealthy individuals and institutions, potentially providing retail investors with better long-term returns and broader exposure to the economy.

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The performance of private markets compared to public markets remains a contentious topic. Supporters of private equity assert that it has outperformed public equity indexes over time. For instance, a report by the Committee for Capital Markets Regulation claims that private equity and credit funds can enhance portfolio diversification and yield. However, contrasting views exist. Ludovic Phalippou, a professor at Oxford University, argues that private equity funds have returned similar performance to public equity indexes since 2006, with notable differences in European markets attributed to varying industry mixes.

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Further complicating the discussion, a 2022 study by the Center for Retirement Research at Boston University found that alternative investments, including private equity, did not significantly improve overall returns for public pension plans from 2001 to 2022, although they may have reduced volatility.

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The executive order raises questions about the suitability of private investment options for 401(k) participants. Traditional private equity funds often come with high fees and limited liquidity, requiring investors to commit their capital for extended periods. In contrast, new investment products tailored for retirement plans may offer lower costs and more flexible investment options, allowing for regular contributions and periodic withdrawals. However, these products may still incur higher fees than standard index funds, which can cost as little as $3 to $10 annually for every $10,000 invested.

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Critics of the executive order express skepticism about the actual benefits of private equity access for average investors. Jack Shannon, a principal at Morningstar, cautions that while some new products may outperform traditional public-market equity funds, they must overcome significant fee hurdles. Phalippou also highlights that even with reduced fees, these new offerings will still be more expensive than conventional index funds.

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• “Our updated analysis finds that private equity and credit funds continue to generate high returns and offer significant portfolio diversification opportunities,” — Committee for Capital Markets Regulation

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• “There is no clear outperformance in the US. There is in Europe, but it seems driven by (a) different industry mix,” — Ludovic Phalippou, Professor of Financial Economics, Oxford University

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• “It is certainly possible that some of these new products may beat a traditional, public-market equity fund. But they’re going to need to clear significant fee hurdles to do so, as these funds are much costlier than the average (exchange-traded fund) investors are used to,” — Jack Shannon, Principal of Equity Strategies, Morningstar

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The executive order by President Trump to broaden access to private equity investments within retirement plans reflects a significant shift in investment policy. While it aims to provide retail investors with new opportunities, the debate surrounding the performance of private versus public markets, along with concerns about fees and liquidity, underscores the complexity of this initiative. As the financial landscape evolves, stakeholders will need to navigate these challenges to ensure that the benefits of private equity access are realized for everyday investors.

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