Stricter US rules forecast amid 401(k) expansion
US regulation of alternative assets is set to ramp up and should be welcomed as the industry expands into the 401(k) market, according to AllianceBernstein’s Matt Bass.
The asset manager’s head of private alternatives highlighted US President Donald Trump’s recent executive order, “democratising access to alternative assets for 401(k) investors” to ensure “better returns and diversification” for individual pension plans.
The move is set to open up the $12tn (£9.1tn) retirement plan market to alternative asset managers, including those allocating to private credit.
Read more: Secondaries set to be main beneficiary of 401(k) inclusion
Bass has suggested that the move will pave the way for further oversight of private markets.
“I certainly expect there to be more regulation as the market continues to open up to retail investors, including the defined contribution market as an example,” he told Alternative Credit Investor.
Read more: Nearly half of US pension savers would invest in private assets
“I don’t think that’s a bad thing at all. We embrace that, I think it raises the bar for participants in the industry, and I think that’s a normal part of the growth and maturation of any market to have an appropriate level of regulation.”
The potential inclusion of alternative assets within 401(k) plans has been heralded by the industry but met with concern by some onlookers, who have questioned whether less liquid and transparent investments are suitable for retail investors.
US senators including Elizabeth Warren and Bernie Sanders have warned that these types of assets are “risky” as they lack the investor protections found in public markets.
The senators expressed concerns over compliance failures among private funds, particularly relating to conflicts of interest, fees and expenses, and policies governing material non-public information.
