Evergreen and semi-liquid structures are emerging as the industry standard for bringing private credit into 401(k) retirement plans, although some managers are also exploring modified closed-end approaches.
The new initiatives follow US President Donald Trump’s August executive order allowing alternative assets, including private credit, into 401(k) retirement accounts.
Industry participants told Alternative Credit Investor that managers are considering a variety of products to tap into the 401(k) market. Evergreen funds remain the most popular route, offering the daily liquidity that retirement savers expect while still enabling managers to deploy capital into longer-term private credit and private equity positions. These vehicles can typically manage subscriptions, partial redemptions and liquidity needs through a mix of cash buffers, credit lines secondaries activity and pacing models.
Read more: Private credit: The missing piece in 401(k) portfolios?
At a recent Goldman Sachs webinar, the bank signalled a focus on breaking into 401(k)s.
Kristin Olson, global head of alternatives for wealth, said “one of the key unlocks” for the industry was “the advent of evergreen structures, which are actually making this possible, because for the first time you can use alternative investments in retirement accounts”.
Robert Wolfe, CBEC, managing director and wealth management adviser at Apollon Wealth Management, says managers are converging on a common blueprint for bringing private markets into 401(k)s, embedding them in multi-asset default options, delivering them through institutional wrappers such as collective investment trusts (CITs), and using evergreen or semi-liquid fund structures to handle liquidity needs.
Read more: Stricter US rules forecast amid 401(k) expansion
He told ACI that an industry consensus is forming that private markets should not be offered as stand-alone investment options in 401(k)s. Instead, private credit and private equity should sit only as modest allocations within professionally managed multi-asset funds.
Several firms have already begun moving in this direction. Great Gray has partnered with BlackRock on a target-date series using a custom glidepath, with a private markets sleeve accessed through a CIT that invests primarily in BlackRock’s evergreen interval fund. Blue Owl and Voya have also teamed up to bring private credit and other private market exposures into defined contribution plans via CIT structures embedded in multi-asset funds.
“I believe the common thread is that serious managers are not trying to retrofit retail alternatives into 401(k)s,”
Wolfe said. “Instead, they are designing retirement-specific architectures: modest private market sleeves inside professionally managed defaults like target-date funds and managed accounts, delivered through CITs and evergreen or semi-liquid funds, all engineered to strike a daily net asset value and honour participant-level liquidity while still capturing some of the structural advantages of private credit.”
Read more: Secondaries set to be main beneficiary of 401(k) inclusion
Yuriy Shterk, general manager of alternative assets at Clearwater Analytics, explained that some managers are testing closed-end private funds that could work within long-dated retirement vehicles.
“Some managers are exploring ways to incorporate closed-end fund structures into long-dated retirement vehicles, which could better align the investment duration with participants’ retirement timelines and risk profiles,” he said. “The key is matching the fund structure to both the liquidity needs of retirement savers and the underlying investment strategy.”
