Imagine a world where your retirement savings are invested in private markets, and you could check their value every single day, just like your stock portfolio. Sounds revolutionary, right? But here's where it gets controversial: this shift could be closer than you think, thanks to a massive influx of retirement funds into private markets, according to KKR's Eric Mogelof. And this is the part most people miss—it’s not just about convenience; it’s about transparency, volatility, and who gets to play in this high-stakes game.
In a recent discussion on the 'Capital Allocators' podcast, Mogelof highlighted how the traditional structure of 401(k) plans, designed for daily pricing and liquidity in public markets, is clashing with the opaque, less frequent valuation practices of private markets. Private equity assets, for instance, are typically priced monthly or quarterly, which can obscure market fluctuations. This has historically made them the domain of institutional investors who can stomach slower payouts and delayed price updates.
But now, with U.S. President Donald Trump backing efforts to channel more of the $12 trillion in 401(k) plans into alternative assets like private equity, real estate, and even cryptocurrency, the demand for real-time transparency is skyrocketing. Here’s the bold part: Mogelof suggests that the industry will likely move toward daily pricing for private markets, a seismic shift that could democratize access but also expose everyday investors to risks they’ve never faced before.
So, how do we get there? Funds currently use methods like comparing similar companies or discounted cash flow analysis to value private assets—a process called 'marking.' But doing this daily is a Herculean task. Mogelof proposes two paths: restrict 401(k) transactions to a monthly basis, or overhaul the entire system to accommodate daily pricing. The latter, he believes, is more likely.
Here’s where opinions will clash: While Mogelof is confident that in a decade, private markets will see 'very meaningful allocations' from defined-contribution (DC) plans, not everyone agrees. Critics argue that retail investors may not be equipped to handle the complexity and risk of private markets. Others worry that daily pricing could artificially inflate volatility or create liquidity issues.
KKR and other firms are already partnering with plan managers to grab a piece of this pie, but widespread adoption will take time. So, here’s the question for you: Is daily pricing for private markets a game-changer for retirement savers, or a risky gamble? Let us know in the comments—we’d love to hear your take on this potentially transformative shift.
