Key Takeaways
- • Private equity evergreen funds managed by Apollo, Blackstone, KKR, Carlyle Group, and Ares Management returned a median of 11.20% in 2025, significantly underperforming the S&P 500 (17.43%) and MSCI ACWI index, despite being marketed to retail 401(k) investors as competitive alternatives.
- • Over the three-year period from 2023 to 2025, private equity evergreen funds delivered a median annualized return of 11.24%—approximately half the returns of broad public stock market indexes—even before accounting for sales charges and management fees.
- • The Private Equity Stakeholder Project (PESP) analysis challenges industry marketing claims about alternative investment suitability for retirement plans at a critical moment when federal regulators are proposing new rules governing fiduciary duties around alternative investments in 401(k) plans.
- • High fee structures compound performance underperformance, with private equity firms charging substantially higher fees than public equities while delivering lower net returns, raising concerns about long-term retirement savings erosion for everyday workers.
- • Regulatory action is imminent, with federal officials expected to release proposed rules addressing fiduciary standards for alternative investments in 401(k) plans, potentially expanding private equity access to retirement savings.
Summary
The Private Equity Stakeholder Project released research challenging the suitability of private equity evergreen funds for 401(k) retirement plans, finding significant performance gaps between marketed alternatives and public equity benchmarks. The analysis examined funds from major private equity managers—Apollo, Blackstone, KKR, Carlyle Group, and Ares Management—that are specifically marketed to retail investors and positioned as potential 401(k) investment options.
In 2025 alone, the median private equity evergreen fund returned 11.20%, trailing the S&P 500 by 623 basis points (17.43%) and the MSCI ACWI global index by an even wider margin. The underperformance extended across a longer timeframe: from 2023 to 2025, median annualized returns reached only 11.24%—approximately half the performance of broad public stock market indexes. These figures represent net returns before accounting for sales charges, which further erode investor proceeds.
The timing of this research is significant, as federal regulators prepare to release proposed rules addressing fiduciary duties when retirement plan sponsors consider alternative investments. Jim Baker, executive director of PESP, stated that the findings "raise serious questions for retirement savers at a moment when federal regulators are considering changes that could open the door wider to private equity in 401(k)s." The central concern is that private equity firms are marketing these products directly to everyday workers while fee structures and recent performance data suggest retirement savings may be significantly eroded over time.
The research underscores a critical disconnect between industry marketing narratives—which emphasize diversification and long-term value—and actual returns delivered to retail investors through evergreen fund structures. For institutional investors and fiduciaries evaluating private equity exposure within retirement plans, the data suggests that public equity alternatives have substantially outperformed comparable alternative products while maintaining superior liquidity and transparency characteristics.
In 2025 alone, the median private equity evergreen fund returned 11.20%, trailing the S&P 500 by 623 basis points (17.43%) and the MSCI ACWI global index by an even wider margin. The underperformance extended across a longer timeframe: from 2023 to 2025, median annualized returns reached only 11.24%—approximately half the performance of broad public stock market indexes. These figures represent net returns before accounting for sales charges, which further erode investor proceeds.
The timing of this research is significant, as federal regulators prepare to release proposed rules addressing fiduciary duties when retirement plan sponsors consider alternative investments. Jim Baker, executive director of PESP, stated that the findings "raise serious questions for retirement savers at a moment when federal regulators are considering changes that could open the door wider to private equity in 401(k)s." The central concern is that private equity firms are marketing these products directly to everyday workers while fee structures and recent performance data suggest retirement savings may be significantly eroded over time.
The research underscores a critical disconnect between industry marketing narratives—which emphasize diversification and long-term value—and actual returns delivered to retail investors through evergreen fund structures. For institutional investors and fiduciaries evaluating private equity exposure within retirement plans, the data suggests that public equity alternatives have substantially outperformed comparable alternative products while maintaining superior liquidity and transparency characteristics.
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