Nearly half of defined contribution plan sponsors want to know more about adding alternative investments to their 401(k) menus, with the largest plans showing the sharpest jump in interest, according to new research.
Escalent's 2026 Retirement Planscape report, part of its Cogent Syndicated series, found that 44% of DC plan sponsors are interested in learning more about alternatives. The annual study polls more than 1,000 401(k) plan sponsors and tracks how leading recordkeepers and DC investment managers stack up on brand strength and sponsor experience.
Appetite was strongest among the biggest plans. Large plans, those holding between $100 million and $500 million, posted 62% interest, while mega plans above $500 million came in at 50%.
Hedge funds topped the list of alternative asset classes drawing sponsor curiosity, cited by 75%, a sharp rise from 62% in the 2025 edition of the study. Private credit, private equity and private infrastructure followed closely at 75%, 75% and 73% respectively, with venture capital at 72%. Private real estate trailed the pack but still registered solid interest at 61%.
Sponsors pointed to two main reasons for wanting alternatives on their lineups: lower fees, cited by 35%, and diversification or downside protection, cited by 33%.
But the reasoning shifted depending on plan size. Mid-sized plans, those between $20 million and $100 million, ranked inflation protection as their top driver at 40%, far outpacing small plans under $20 million, where just 16% said the same. Large plans leaned most heavily on diversification and risk management, while mega plans prioritized liquidity above other factors.
Sonia Davis, lead author of the report and senior product director in Escalent's Cogent Syndicated division, said regulatory change is driving the shift.
"New regulations from the US Department of Labor have given alternatives a major boost," Davis said. "Plan sponsors now have greater flexibility in deciding which asset classes are advantageous to their plans, and that's led to an influx of interest in alternatives. The industry is still in the early exploratory phases with most sponsors mulling which types of alternative investment options could fit best within their lineups. As such, recordkeepers and DC investment managers will need to lean heavily into education to translate sponsor curiosity into smart adoption."
The research also pointed to a disconnect in sponsor thinking. High fees and expenses ranked as the top obstacle to adding alternatives, even though lower fees was simultaneously named the leading reason for wanting them in the first place.
Escalent said this contradiction points to a broader knowledge gap around how alternative investments are priced, which products suit DC plan participants, and how providers should be guiding sponsors through implementation.
Many people are taking a dangerous gamble with their financial future, new study warns.
Britt is named CFO of Wipfli, a $600 million accounting firm that audits two NFL franchises
The acquisition pairs Zephyr's 21,000-product separately managed account database with YCharts' newly launched AI agent assistant for investment research.
The war for talent continues in the Sunshine State with as Truist and RayJay teams managing a collective $1 billion in client assets defect to other firms.
Americans now estimate they need $1.2 million to retire comfortably, but rising costs and debt are making that goal increasingly difficult to reach.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
