A new survey from HarbourVest Partners of 200 senior defined contribution plan decision-makers found that 94% said they are confident private markets investments will improve retirement outcomes and 86% view diversification across private assets as a key guardrail for managing risk.
In the midst of an unprecedented demographic shift in which the U.S. Census Bureau expects the 65-and-over population to nearly double to 88 million by 2050, the new survey was geared to capture sentiment toward emerging private markets investments in retirement portfolios.
“To manage risk and provide adequate guardrails, plan sponsors should leverage the same mutual fund playbook which has made stocks and bonds the center of retirement investing.”
HarbourVest CEO John Toomey
The findings show that plan sponsors overwhelmingly see an opportunity for private markets investments to improve retirement outcomes, with diversification viewed as a key risk guardrail.
“Many investors don’t realize that many private markets funds invest in a narrow part of the market. To manage risk and provide adequate guardrails, plan sponsors should leverage the same mutual fund playbook which has made stocks and bonds the center of retirement investing,” said John Toomey, CEO of HarbourVest Partners. “Diversification across different managers, investment styles, company size and other key dimensions is a common sense, demonstrated way to reduce risk in public markets investing and private markets investing is no different.”
Many plan sponsors surveyed also noted education and communication with participants as an area of concern. About one-third of respondents (34%) said that participant understanding was among their greatest concerns.
Alongside their private markets optimism, plan sponsors recognize the importance of additional education as they consider private markets in DC plans. 91% said their organization’s in-house expertise is prepared to evaluate, select, and manage private market investments within DC plans.
At the same time, respondents highlighted several areas where additional support would be valuable. When asked where they would most need education or guidance, the top two areas identified were understanding the regulatory environment and fiduciary duties, followed closely by portfolio-construction approaches for private markets.
When asked about their greatest concerns regarding the inclusion of private markets within DC plans, respondents ranked cost, fees, and transparency as their top concern, followed by participant communication and understanding. These findings point to a desire not only for robust investment solutions, but also for clear disclosures and communication to help participants make informed decisions.
Underestimating concentration risk
While plan sponsors overwhelmingly agree that diversification is key to managing risk, their definition of diversification at the asset class level may need updating given the wide dispersion of returns in private markets as compared to public markets.
Nearly all (99%) plan sponsors said that they would consider a fund with less than 100 underlying assets to be diversified. However, HarbourVest data shows that a private equity fund requires 200 or more underlying holdings to achieve full diversification.
The study results also show that plan sponsors may be underestimating the concentration risk of the typical private equity drawdown fund. Less than 20% of respondents correctly responded that the average private equity drawdown fund can contain fewer than 30.
HarbourVest’s findings highlight the opportunities for plan sponsors to learn more about risks and portfolio construction as they consider private markets investments in their plans.
Boston-based HarbourVest is an independent, global private markets firm with over 43 years of experience and more than $146 billion of assets under management as of June 30, 2025. Its interwoven platform provides clients access to global primary funds, secondary transactions, direct co-investments, real assets and infrastructure, and private credit. Across its private markets platform, its team has committed more than $63 billion to newly formed funds, completed over $64 billion in secondary purchases, and invested over $47 billion in direct operating companies.
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