Key Takeaways
- • The Managed Funds Association (MFA) and the American Investment Council (AIC) filed an amicus brief asking the US Supreme Court to clarify how courts assess fiduciary duties for retirement plans.
- • The industry bodies argue that litigation risk tied to alternative investments is hindering their inclusion in 401(k) plans, the most common US workplace pension scheme.
- • The groups propose that plaintiffs compare an investment against a "genuinely similar strategy" before inferring imprudence, rather than judging fiduciaries on hindsight performance against unrelated funds.
- • The filing follows a Trump executive order allowing private markets investments in US retirement plans, with managers such as Blackstone already pursuing 401(k) access via Empower.
Summary
The Managed Funds Association (MFA), the trade body for the alternative asset management industry, and the American Investment Council (AIC) have submitted an amicus brief asking the US Supreme Court to clarify how courts assess the fiduciary duties of retirement plans. According to the filing's sponsors, litigation risk associated with alternative investments is currently deterring their inclusion in 401(k) plans.
The groups argue that fiduciaries should be judged on the quality of their decision-making process rather than on hindsight performance. Because plan sponsors can be sued based on hindsight comparisons alone, the industry bodies say fiduciaries are pushed toward familiar, conventional options, even though alternatives may enhance returns and diversify risk.
The MFA and AIC want courts to require plaintiffs to compare an investment against a "genuinely similar strategy" before inferring imprudence, instead of pointing to unrelated, better-performing funds in hindsight. The groups contend this would deter meritless claims, preserve fiduciary discretion, and expand access to diversified investment options for retirement savers. MFA president and chief executive Bryan Corbett said American workers with 401(k) plans should have access to the same diversified strategies that pensions use to strengthen long-term returns and manage risk.
The filing comes after US President Donald Trump signed an executive order last year allowing private markets investments to be included in US retirement plans. Since then, alternative managers have sought 401(k) access through collaborations and tailored products. Blackstone, for example, partnered with retirement plan administrator Empower earlier this year to gain access to 401(k) plans.
The groups argue that fiduciaries should be judged on the quality of their decision-making process rather than on hindsight performance. Because plan sponsors can be sued based on hindsight comparisons alone, the industry bodies say fiduciaries are pushed toward familiar, conventional options, even though alternatives may enhance returns and diversify risk.
The MFA and AIC want courts to require plaintiffs to compare an investment against a "genuinely similar strategy" before inferring imprudence, instead of pointing to unrelated, better-performing funds in hindsight. The groups contend this would deter meritless claims, preserve fiduciary discretion, and expand access to diversified investment options for retirement savers. MFA president and chief executive Bryan Corbett said American workers with 401(k) plans should have access to the same diversified strategies that pensions use to strengthen long-term returns and manage risk.
The filing comes after US President Donald Trump signed an executive order last year allowing private markets investments to be included in US retirement plans. Since then, alternative managers have sought 401(k) access through collaborations and tailored products. Blackstone, for example, partnered with retirement plan administrator Empower earlier this year to gain access to 401(k) plans.
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