Institutional Investor Newsletter

1. Restrictions on US outbound investments

Former President Joe Biden issued Executive Order (EO) 14105, “Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern” on August 9, 2023. More recently, on October 28, 2024, the US Department of the Treasury issued a final rule to implement this order, which became effective on January 2, 2025.

With the rule now in effect, institutional investors have been implementing provisions in their side letters and due diligence processes to ensure compliance.

2. Private equity’s push into the $12 trillion 401(k) market faces hurdles

Despite regulatory changes allowing private equity in 401(k) plans, it currently accounts for only 0.1 percent of the $12 trillion US retirement market. While 36 percent of retirement plan investors express interest in private equity, concerns over high fees, illiquidity, and fiduciary risks have slowed its adoption. As legal scrutiny and performance challenges persist, plan fiduciaries remain cautious about expanding private equity’s role in retirement savings.

3. Global private credit continues to surge

According to recent industry reports, global private credit funds increased by approximately $255 billion in 2024, marking a 12-percent increase from the $228 billion raised in 2023. Industry experts forecast that fundraising could further climb to between $280 billion and $300 billion in 2025, as investor demand for yield and diversification continues to grow amid ongoing market uncertainty. These trends reflect the rising appeal of private credit as an alternative to traditional fixed income in a higher-rate environment.

4. Now available: Updated ILPA reporting template and new performance template

The Institutional Limited Partners Association (ILPA) has released an updated reporting template and a new performance template for institutional investors. These templates aim to enhance transparency regarding the economics of investments in private funds, and they are now available on the ILPA website.