By Saeed Azhar,Tatiana Bautzer

Copyright reuters

SummaryCompaniesGoldman, T. Rowe Price to offer alternative investments for retirement accountsNew investments include private credit and equity, targeting $9 trillion in 401(k) accountsProducts tailored for different clients, with limits on alternatives in portfolios

NEW YORK, Sept 15 (Reuters) – Goldman Sachs (GS.N), opens new tab and asset manager T. Rowe Price, which announced a partnership earlier this month, plan to begin offering new alternative investments for wealthy clients by the end of the year, their executives told Reuters.

Alternative investments for retirement accounts will be offered next year, they added.

The plan comes after an executive order by President Donald Trumpbroadened access of 401(k) retirement accounts to alternative investments such as private credit, private equity and others. The move could give private asset managers access to about $9 trillion under management in 401(k) accounts.

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Goldman and T. Rowe recently struck a deal in which Goldman will become a shareholder in the asset manager, taking a stake of up to $1 billion. Both will partner to offer products to retail investors. T. Rowe manages $1.6 trillion, of which around $1 trillion is retirement related.

The alternatives will be tailored to different types of clients at the end of the year through next year, T. Rowe CEO Rob Sharps told Reuters in an interview.

“It’s reasonable to expect that we can target having all of the different products in market by mid-2026,” he said.

Some will be funds with a targeted retirement date, which are popular among investors. The portfolios would have a small portion invested in alternative assets and the rest in public and liquid investments. The proportion of alternatives may be reduced as the investor’s retirement date approaches.

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Other products, directed exclusively at wealthy clients, will be alternative portfolios mixing private credit, equity, or equity funds mixing private equity and stocks.

They will begin to be offered to Goldman and T. Rowe clients, but may be distributed more widely.

“The idea is to be able to open the products to everybody,” said Marc Nachmann, Goldman’s head of wealth and asset management.

After the approval of alternative investments in retirement funds, analysts pointed to risks such as lack of liquidity and transparent pricing.

“New structures can provide some element of liquidity and daily pricing to give more comfort to individual investors,” Sharps said.

There will be limits to the proportion of portfolios that can be allocated to alternatives, and managers will include alternatives in funds with retirement dates decades away, with the objective of getting higher returns.

“It’s still very early days, today investors in alternatives are mainly large institutions as endowments or high net worth individuals,” Nachmann said.

In the long term, alternative investments in retirement accounts could rise to 10% to 20% of the total, Sharps said.

The initial discussions for the deal began a year ago, when Sharps and Goldman President John Waldron talked about the convergence in markets and growth of private assets. The companies have a long relationship, and substantive deal talks began in the early summer, Sharps said.

Reporting by Tatiana Bautzer and Saeed Azhar; Editing by Lananh Nguyen, Sharon Singleton and Mark Porter

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Tatiana BautzerThomson ReutersTatiana Bautzer is a U.S. banking correspondent at Reuters in New York. She previously covered banks in Brazil, breaking news on deals by major global corporations, initial public offerings and bankruptcies. She has also delved into corruption scandals at Brazilian conglomerates and business disputes between billionaires. Prior to joining Reuters in 2015, Bautzer worked for business magazines Exame and Istoe Dinheiro and newspapers Valor Economico and O Estado de S. Paulo. She previously served as international correspondent for Valor Economico in Washington, D.C., covering multilateral institutions and trade. Bautzer holds a B.A. in Journalism and an MBA from the University of Sao Paulo.
Saeed AzharThomson ReutersSaeed Azhar is a Reuters financial journalist and part of the U.S. banking team, which covers Wall Street’s biggest banks. He focuses on Goldman Sachs and Bank of America, and also writes about regional banks. Before moving to New York in July 2022, he led the finance team in the Middle East from Dubai, and also worked in Singapore, covering Southeast Asia finance.