U.S. fund industry backs retirement plans adding crypto and private credit

The next battleground in retirement investing is not whether Wall Street can sell alternative assets to 401(k) savers, but how much risk ordinary workers should take on for the promise of higher returns. The Labor Department’s proposed rule would let fiduciaries add products backed by private equity, private credit, real estate, infrastructure and digital assets to participant-directed plans, including target-date funds that sit inside millions of retirement accounts.

The proposal, titled Fiduciary Duties in Selecting Designated Investment Alternatives, was issued on March 30 and is designed as a process-based safe harbor under ERISA. In practical terms, it would shield employers from lawsuits if they “objectively, thoroughly, and analytically” weigh performance, fees, liquidity, valuation, benchmarks and complexity before choosing an investment. Supporters say that gives plan sponsors clearer guardrails; critics say it could loosen the protections that have kept illiquid, difficult-to-price products out of mainstream retirement menus.

The comment period ended June 1 after drawing intense attention from across the retirement industry, with industry tracking showing nearly 37,000 comments as the deadline approached and more than 33,000 letters already logged from individuals, firms, advocacy groups and trade associations. The Labor Department said the proposal could expand retirement investment options for more than 90 million Americans, while the White House framed the policy as a way to let Americans preparing for retirement access funds that include alternative assets when fiduciaries judge that such access can improve net risk-adjusted returns.

For ordinary retirees, the issue is not abstract. Private credit can mean loans made outside public markets, with fewer disclosure requirements and less daily pricing. Private equity can mean ownership stakes in companies that do not trade on stock exchanges, often bringing higher fees and slower access to cash. Crypto adds a different kind of risk: sharp price swings, custody concerns and valuation questions that can make a retirement balance harder to trust. Critics warn that these products could become a new source of capital for asset managers looking to gather more assets, while offering savers more complexity than compensation.

The Managed Funds Association backed the proposal, arguing that pensions have long used alternative investments and that 401(k) savers deserve similar access. It said portfolios that include alternatives can improve long-term performance while reducing risk. The broader stakes now move to the Labor Department’s review of the comments, possible revisions and a White House review before any final rule can be published. Born from Donald Trump’s August 7, 2025 executive order, the fight has become as much about political power and retirement policy as it is about returns, fees and who gets to profit from America’s retirement savings.