It is “unfair” that 401(k) plans don't have access to private equity, said David M. Rubenstein, co-CEO of alternative investment firm Carlyle Group, speaking Thursday at the Dow Jones Private Equity Analyst Conference at the Waldorf Astoria Hotel in New York.
“Why not allow them to get better returns private equity can afford?” Mr. Rubenstein asked.
He added that private equity's illiquidity should not be an issue for defined contribution plans.
The theory of 401(k) plans is participants should stay invested in them during their working lives. If you are investing in a 401(k) for 30 years, you do not need that much liquidity, Mr. Rubenstein said.
“Shouldn't people who need the higher risk of return, get higher risk-adjusted return?” Mr. Rubenstein said.
Anthony D. Tutrone, managing director and global head of alternatives group at Neuberger Berman, said during the conference that Neuberger Berman is working on a private equity product for defined contribution plans aimed at target-date funds. He said the firm already has a similar product for hedge funds.