Good morning and thank you for the invitation to speak with you today.[1] Historically, this conference has been focused on closed-end funds, but it has been since re-branded to include retail alternatives. Today, my remarks will focus on the future use of private investments as part of diversified portfolios in defined contribution plans.

Before we discuss the future, however, let us turn to the past. By the early 2000s, it was clear that there had been a sizable shift in how workers were to provide for their retirement needs. Previously, many could rely on Social Security and company-sponsored defined benefit pension plans. Now, individuals are increasingly dependent on participant-directed vehicles, such as 401(k) plans, which moved the burden of accumulating sufficient assets for retirement to them. Accordingly, individual Americans are responsible for constructing and managing their own retirement portfolios, which can be challenging.

In 2006, Congress made this task a bit easier by enacting the Pension Protection Act, which amended the Employee Retirement Income Security Act (ERISA).[2] One provision addressed the practice of many defined contribution plans at the time to automatically default participants into money market funds, stable value funds, and similar vehicles, should the participant not actively select an investment choice. While these types of investment options present little risk of capital loss, they will not provide returns over time sufficient to generate adequate retirement savings. Thus, Section 624(a) of the Pension Protection Act required the adoption of regulations to provide guidance on designating default investments with a mix of asset classes consistent with capital preservation or long-term capital appreciation, or a blend of both.