Alternative Asset Executive Order Update from Mercer Trust Company
Mercer Trust Company ("Mercer") is the ABA Retirement Fund Program’s ("Program's") investment fiduciary, discretionary trustee, and custodian.
On August 7, 2025, President Trump signed an Executive Order (EO) entitled “Democratizing Access to Alternative Assets for 401(k) Investors.”
The main purpose of the EO is to address the perceived gap defined contribution (DC) plans have in accessing various alternative investments that may provide differentiated growth and diversification opportunities.
The EO also mentioned the burden that litigation has put on innovation within DC plans and asks the Department of Labor (DOL) to prioritize and review related actions to mitigate litigation for ERISA fiduciaries.
It is difficult to predict the outcome of the DOL’s review given the large number of asset-classes and sub-asset classes included in the EO.
Frequently Asked Questions
Do 401(k) plan sponsors have to take action now as a result of the EO?
- No, the EO directs the DOL to review current and past guidance for ERISA fiduciaries in connection with making alternative assets available through asset allocation funds and seek to clarify the agency’s views through further regulations or guidance. Mercer Trust Company, as investment fiduciary for the ABA RF Program, will follow these developments closely.
What does the EO include under the umbrella of “alternative assets”?
- Private market investments, including private equity, credit and other instruments not publicly traded
- Direct and indirect investments in real estate (including debt), commodities and infrastructure.
- Actively managed digital assets.
- Lifetime income strategies, including longevity risk sharing pools. This is likely meant to apply predominantly to:
- Annuities which may be backed by pools of assets that include private market investments. Longevity risk sharing pools generally provide increased lifetime income, without additional investment risk, using mortality credits.
Does the Program currently feature alternatives or private assets?
- Yes, the Program offers the Alternative Alpha Fund, which is a liquid alternative strategy with an absolute return objective.
- The Program’s Real Asset Return Fund/Inflation Protection Fund has an allocation to private real estate through a strategy managed by PGIM Real Estate.
- The Target Risk Funds hold underlying allocations to both the Alternative Alpha Fund and the Real Asset Fund, as such participants with allocations to a Target Risk fund have exposure to private assets.
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