Harvard Business School explains why putting private equity inside a 401k may deliver less benefit than the marketing suggests once fees, illiquidity, and weak performance persistence are considered. It proposes a simpler alternative of listed private equity exposure to capture industry economics with daily liquidity.
Should Mom Have Private Equity in Her 401K?
Nori Gerardo Lietz
Research
25 Pages
Key Takeaways
Alpha Looks Thin: Direct alpha versus the S&P was negative 0.04% over the past 20 years.
Retail Fees Compound: A 0.85% oversight fee can dilute a 10% net return by about 12%.
Public Exposure May Win: U.S. public PE firms outperformed their private flagship funds by 23.15% over 5 years.
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