Alternative investing has long been the domain of large institutions and high-net-worth individuals. Family offices, pension funds, endowments, and sovereign wealth funds have relied on these asset classes for decades to diversify portfolios and capture returns that don’t move in lockstep with public equities or bonds. For average retail investors access to alternatives has been limited, constrained by regulation, accreditation rules, and product design. That dynamic has been shifting in recent years but is going to change dramatically moving forward.
To understand where we are today, and why the 2025 Executive Order and the surge of new platforms matter, we first need to look back at the growth of alternatives over the past decade.
A Historical Look at Alternative Investing Growth
Alternatives have gone from a niche asset class to a dominant force in global asset management.
- In 2014, global alternative assets under management (AUM) stood at about $7.2 trillion.
- By 2024, that figure had swelled to $18.2 trillion, more than doubling in just a decade.
- Forecasts now project global alternatives AUM could reach $29.2 trillion by 2029, underscoring continued investor appetite and product expansion (CAIS Group).
This growth has been fueled largely by institutional demand. Pension funds, university endowments, and insurance companies have steadily increased allocations to private equity, real estate, private credit, infrastructure, and hedge funds. The attraction is straightforward: these asset classes offer the potential for higher returns, inflation hedging, or diversification benefits compared to public stocks and bonds.
For example:
- U.S. public pension plans now allocate around 30% of their portfolios to alternatives, compared with less than 10% two decades ago.
- Private equity in particular has drawn massive inflows, delivering outperformance versus public markets during many periods of volatility.
Meanwhile, retail investors, who collectively manage trillions in retirement accounts and taxable portfolios, were largely left out. Regulations and product structures kept alternatives behind gates that only accredited investors or institutions could pass through.
Opening the Door: Shifts in Product Innovation
Even before regulatory change, the industry recognized the gap. Product innovation started to erode the traditional barriers to entry:
- Evergreen private market funds were introduced, providing ongoing subscription opportunities, more flexible redemption windows, and lower minimums.
- Interval funds and tender-offer funds emerged, offering partial liquidity while still giving retail investors exposure to less liquid private assets.
- Crowdfunding platforms under Regulation A and Regulation CF opened pathways for non-accredited investors to participate in real estate, startups, and fractional ownership of assets.
This product expansion allowed retail investors to take their first steps into alternatives. Real estate investment platforms such as Fundrise, Arrived Homes, and RealtyMogul made it possible to buy into real estate projects for as little as $10 to $500. Art, collectibles, and private credit followed, with platforms like Masterworks and Yieldstreet targeting a wider investor base.
These platforms benefited from changing investor expectations. Retail investors, especially millennials and Gen Z, want access to the same opportunities institutions have long enjoyed. Still, access remained semi limited, often with higher fees than public markets, liquidity restrictions, and limited diversification compared to institutional products. A larger unlock was needed, and in 2025, it arrived.
A Forward Look: The 2025 Executive Order
On August 7, 2025, the White House issued an Executive Order on Democratizing Access to Alternative Assets for 401(k) Investors (White House).
The order marks a turning point for retail access. Its key directives include:
- The Department of Labor (DOL) must issue rules, regulations, or guidance clarifying fiduciary duties under ERISA when 401(k) plans offer funds with exposure to alternatives.
- The Securities and Exchange Commission (SEC), in consultation with the DOL, is tasked with revisiting the definitions of “accredited investor” and “qualified purchaser,” potentially expanding eligibility for alternatives.
- The order emphasizes that “every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity for plan participants … to enhance the net-risk adjusted returns on their retirement assets” (Debevoise).
In plain terms:
This executive order signals that Washington wants to bring alternatives into mainstream retirement investing. By reducing the litigation and fiduciary risks that have historically discouraged 401(k) sponsors from offering alternative options, the order sets the stage for greater inclusion of private equity, real estate, infrastructure, and private credit within retirement accounts.
Why This Matters for Retail Investors
The U.S. retirement system is massive, with more than $8.9 trillion in 401(k) assets as of 2024. Opening the door for even a modest percentage of these assets to be allocated to alternatives could be transformative.
For retail investors, this development means:
- Diversification within retirement accounts – Portfolios that include alternative assets can reduce correlation to public equity markets, smoothing returns over the long term.
- Potential for higher returns – Alternatives like private equity and private credit have historically outperformed public market equivalents in many cycles.
- Inflation hedging – Real estate, infrastructure, and commodities often act as hedges in inflationary environments.
- Long time horizons fit alternatives – Since 401(k) assets are designed for long-term retirement savings, their natural illiquidity can align with alternative investment structures.
The challenge, of course, lies in implementation: liquidity, valuation transparency, and fee structures will need to be carefully managed by fiduciaries.
Growth Projections and Market Impact
The combination of policy change and platform innovation is fueling strong projections for retail participation in alternatives:
- Retail share of alternatives AUM is expected to rise from ~13% today to ~23% in the next 3–5 years (BNY Mellon).
- North America’s alternatives AUM is projected to increase from ~$7 trillion to $8.6 trillion by 2025 (CoinLaw).
- Evergreen and interval fund structures are forecast to gather substantial inflows as advisors and broker-dealers integrate them into retail distribution.
If the 401(k) channel opens in earnest, the opportunity expands dramatically. Even a 5% allocation of 401(k) assets to alternatives would represent hundreds of billions in new flows.
Risks and Considerations for Retail Investors
While the growth story is compelling, retail investors should proceed with caution.
- Liquidity: Unlike mutual funds or ETFs, many alternatives require multi-year commitments. Even interval funds may restrict redemptions.
- Fees: Alternatives often layer management fees, carried interest, and platform fees. Costs can erode returns.
- Valuation opacity: Private market valuations are less transparent and updated less frequently.
- Fiduciary oversight: Plan sponsors will need to establish robust processes to manage risks and ensure disclosures are clear.
- Behavioral risks: Retail investors may overestimate upside or chase “hot” alternative strategies without appreciating risks.
The Democratization of Alternatives
Looking ahead, the combination of regulatory support, product innovation, and rising investor demand points to a new era for alternatives:
- 401(k) inclusion – If fiduciary guidance from the DOL and SEC is clear, many employers may start adding diversified alternative funds to their plans.
- Platform expansion – Expect more platforms to emerge across private equity, infrastructure, and private credit, lowering minimums and providing fractional ownership.
- Investor education – Transparency and investor literacy will be key. Platforms that explain risks and costs clearly are likely to gain trust.
- Performance through cycles – The next test will be how retail-accessible alternatives perform through market downturns. Strong performance could accelerate adoption, while poor outcomes could spark skepticism.
Conclusion
From $7.2 trillion in 2014 to projections of nearly $30 trillion by 2029, alternative assets have become an essential pillar of global investing. Until recently, retail investors had only limited access, but 2025 may be remembered as the year the gates truly began to open.
The Executive Order on 401(k) access to alternatives could prove to be the watershed moment, bringing private markets into the retirement system of millions of Americans. At the same time, platforms like Fundrise, Yieldstreet, and Masterworks are making alternatives tangible and accessible already for investors, even for non-accredited investors.
Fees, liquidity, and transparency will matter more than ever. For retail investors, the key will be to approach alternatives not as a speculative playground, but as a thoughtful addition to a diversified portfolio. It is incredibly important if you are debating an allocation to alternatives to review the investment prospectus beforehand, so that you understand if it is right for you and your portfolio.
Before You Go
I want to share this video that I enjoyed from CNBC, where they are discussing the growing alternative investment market with the CEO of Apollo Global Management, Marc Rowan. Of course, you should take what Marc says with a grain of salt as Apollo makes money managing alternative investments, but it was fascinating to listen to.
Disclaimer:
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