Episode summary
Eric Mogelof - Understanding the 401(k) Market - (EP.464)
Capital Allocators with Ted Seides
· · Hosts: Ted Seides · Guests: Eric Mogelof
Summary
Eric Mogelof argues that retirement assets are already enormous, but the move into private markets will be gradual rather than immediate. He breaks the U.S. retirement universe into defined benefit, defined contribution, and IRA assets, saying the market is more than $40 trillion and that DC is now the fastest-growing bucket, with more than 100 million Americans holding a balance.
He says IRA money already behaves much like private wealth, with a couple of percent in private markets and growing exposure across private credit, private equity, infrastructure, and real estate. DB plans have long used alternatives, though corporate DB has shifted toward fixed income over the past 20 years. The big question is DC, where almost all assets are still in public markets, but 40% of assets are already in target date, managed account, or similar investment solutions that could eventually embed alternatives.
Mogelof’s core argument is that adoption will come first through managed accounts and custom target date funds, not off-the-shelf target date products. He says daily liquidity, daily pricing, fees, and sponsor decision-making create real friction, so the change will take years, not quarters. He expects private credit to lead in some custom solutions, but believes the eventual mix will broaden to PE, infrastructure, and real estate.
Key takeaways
- Eric Mogelof says DC adoption of private markets is “not an if” but a “when,” with meaningful penetration likely in a decade.
- He expects off-the-shelf target date funds to be the slowest channel, while managed accounts and custom target date funds adopt alternatives sooner.
- Mogelof says more than 60% of new DC flows go into target date funds, making that structure the key battleground for future private-market access.
- He thinks private credit will likely be first in custom solutions because it can be daily priced and offers distributions that help with liquidity.
- He says the biggest misunderstanding is that target date money can simply “flip” into private markets, when sponsor approval and product redesign are required.
Notable quotes
“It's not an if, it's really a when. Like there's no doubt in my mind in a decade from now we will see very meaningful allocations within that DC market to private markets”
“there is more than $40 trillion of assets in quote retirement accounts”
“the majority of target date funds today are in passive very lowcost strategies”
“The bigger challenge which again as an industry we can overcome is you still need to be able to mark these strategies on a daily basis”
How the episode opens
It's not an if, it's really a when. Like there's no doubt in my mind in a decade from now we will see very meaningful allocations within that DC market to private markets. Whether it's 10% 15% it's going to be really really big.
I would say over the next 3 to 5 years the offtheshelf is going to take the longest time to get adoption to move. But in the meantime, you're going to see a lot of allocations through managed accounts and custom target date. It will be a hockey stick, but it's not going to be a hockey stick in the next couple of months or couple of quarters.
It really is going to take years for this to play out. Eric, thanks so much for doing this. Oh, Ted, thanks so much for having me.
So, as a follow-up to our last conversation, there's so much noise about what's happening in the retirement markets moving to alts. I thought you'd be the perfect person to help just lay this landscape out, how it really works and what's going on. So, maybe the place to start is just at the highest level when people think of retirement accounts.
How do you think of what that landscape is? You're right. There is a lot of energy and news and activity around the retirement space.
If you were to look at the retirement market in the United States today, there is more than $40 trillion of assets in quote retirement accounts. And we think about it in terms of three large buckets. Define benefit, defined contribution, and the IRA market.
Each of them are ultimately holding assets that are supporting the retirement of individuals. So if you look at those three categories, that 40 trillion has a breakdown. the defined contribution market which is about 12 and a half trillion dollars represents about 30% of the overall retirement market and then DB and IAS are actually split pretty evenly about 35% each.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- 401k alternatives
- private wealth allocations
- target date funds
- defined benefit defined contribution iras
- executive order
Companies and tickers mentioned
- KKR
- KKR
Watch the episode
Watch “Eric Mogelof - Understanding the 401(k) Market - (EP.464)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Capital Allocators with Ted Seides, this episode and its artwork belong to Ted Seides – Allocator and Asset Management Expert. Octagon is not affiliated with the show; this page is an independent summary.
