By Matt Wirz

Investment research provider Morningstar is pushing back against the Labor Department's proposed rule to accelerate the inclusion of private-equity funds and other alternative investments in 401(k) retirement accounts

"Morningstar questions whether this initiative is necessary and whether it will meaningfully benefit the retirement plan participants it is intended to serve," the firm said today in a letter responding to the proposal.

The Labor Department's proposed rule could lower the fiduciary standard of retirement plan sponsors-usually employers- to their members and "allows fiduciaries to rely on claims from parties with the strongest commercial interest in the investment's selection," Morningstar said. The government would be better served finding ways to expand retirement plan access, improve quality of plans and reduce fees, according to the letter.

One of the biggest elements in the plan is to provide legal protection to plan sponsors from class action lawsuits alleging harm to retirees from inclusion of alternative investments.

Firms that manage products like hedge funds, private-equity and private-credit funds have been pushing for the change. It is necessary to give individuals the same investment options available to institutions like pensions and insurers, they say.

Morningstar recommended that the plan be changed to require clear documentation and analysis when alternative investments are being offered by a source with a financial interest in the funds.

"Asset managers have a structural incentive to increase the distribution of higher-fee products, and that incentive exacerbates the informational asymmetry between asset managers and plan sponsors, particularly in smaller plans," Morningstar said.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

(END) Dow Jones Newswires

June 01, 2026 13:46 ET (17:46 GMT)

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