In April, Larry Fink, CEO of BlackRock, the world’s largest asset management firm with more than $11 trillion in assets under management in 2024, argued that 401(k) plans should invest more in private assets, in his annual letter to investors. Last week, BlackRock deepened its push into private assets by partnering with Great Gray Trust Company, which offers 401(k) investments, to provide a target date with a 5%-to-20% allocation to private investments, depending on an investor’s age, in the first half of 2026.
BlackRock’s announcement follows a similar one from asset management firm State Street, which announced a new target date fund in April. These moves mark a significant shift in how retirement plans are structured, bringing traditionally private market investments into mainstream retirement portfolios.
Retirement money accounts for more than half of the money that BlackRock manages, and the firm is already seeing demand for exposure to private assets in DC plans, according to the asset management firm. In a recent survey, 21% of retirement plan advisors said they plan to include private markets investments in the defined contribution plans that they manage.
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The new all-in-one fund will serve as default investments for most 401(k) plans that automatically enroll workers. “The future standard portfolio may look more like 50/30/20 — stocks, bonds, and private assets like real estate, infrastructure, and private credit,” Fink wrote in his annual letter.
As advisers to President Donald Trump are considering a new directive to pave the way for private equity to become a bigger piece of $12.5 trillion 401(k) market, the Office of the Investor Advocate at the Securities and Exchange Commission (SEC) announced last week that it would prioritize the risks and benefits of “Private Market Investments in Retirement Accounts” as an objective for 2026, in its Report to Congress.
In last few months, private market investments in retirement plans have become a huge topic of discussion. Last month, Empower, the nation’s second largest 401(k) plan provider, launched a new program that will pave the way for private markets investments to be included within defined contribution plans.
However, this week, Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Empower Retirement CEO Edmund F. Murphy III seeking answers about the company’s new program “seeks to push retirement savers contribution plans into private equity and private credit, and the threats that these investments pose to Americans’ retirement savings,” ” wrote Sen. Warren.
Related: Empower opens door to private market investments for its 401(k) plan participants
In a new research paper, “The power of private markets: Unlocking the benefits of private assets in defined contribution plans,” BlackRock outlines for plan sponsors and their advisors how incorporating private market solutions into a target date solution can add 50 basis points in portfolio returns annually over the lifecycle of a target date solution.
In the new target date fund, BlackRock will offer an age-based target date fund that will allocate about 15% to 20% to private investments for people ages 25 to 50, and taper that to 5% to 10% for those nearing retirement, over a 40-year lifecycle of the fund. Great Gray, which offers retirement investment options and manages over $210 billion in assets, will use BlackRock's equity and fixed income index offerings as well as private equity investments for its new target date fund.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
