Will buy-out funds be the next asset category for 401(k) plans? The Carlyle Croup moved closer to making that a reality recently by creating a vehicle that allows accredited investors to invest as little as $50,000 through a partnership with a third-party money manager. There is only a two-year minimum, versus the normal 10-year window. The fund is already being sold by Merrill Lynch advisors.
Both KKR and Blackstone have enabled retail investors to access their investment expertise through mutual funds, but the move by Carlyle allows for direct access into their buy-out funds. Eyeing the pool of assets in DC plans in an effort to expand their market and AUM, Carlyle predicts that 401(k) money will be flowing into buy-out funds in two to four years. Will TDF managers see this asset class as an opportunity to broaden their appeal?
