New Study From HarbourVest Shows Vast Majority of Plan Sponsors See Opportunity for Private Markets Investments to Improve Retirement Outcomes

86% say diversification is a “key guardrail” for managing risk

BOSTON--(BUSINESS WIRE)--As Americans prepare for an unprecedented demographic shift in which the 65-and-over population is expected to nearly double to 88 million by 2050¹, a new HarbourVest Partners survey of 200 senior decision-makers at U.S. defined contribution plans captures sentiment towards private markets investments in retirement portfolios.

The findings show that plan sponsors see an opportunity for private markets investments to improve retirement outcomes, with diversification viewed as a key risk guardrail. Many plan sponsors also noted education and communication with participants as an area of concern. Specifically, 94% said they are confident that private market investments can contribute positively, 86% said that diversification is a key guardrail for managing risk and 34% said that participant understanding was among their greatest concerns.²

Managing Risk Through Diversification

While there is an overwhelming belief in the potential benefits to private markets investments, plan sponsors believe that diversification is important for providing adequate risk safeguards.

“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.”

Plan Sponsors Optimistic, but Focused on Education, Fiduciary Duties, and Fees

Alongside their 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.

Plan Sponsors Underestimate Private Market 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. 99% of 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.³

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 30.⁴

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.

About HarbourVest Partners
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. Our interwoven platform provides clients access to global primary funds, secondary transactions, direct co-investments, real assets and infrastructure, and private credit. Our strengths extend across strategies, enabled by our team of more than 1,250 employees, including more than 235 investment professionals across Asia, Europe, and the Americas. Across our private markets platform, our 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. We partner strategically and plan our offerings innovatively to provide our clients with access, insight, and global opportunities.

^1	An Aging Nation: The Older Population in the United States (P25-1140), U.S. Census Bureau (March 2016)
^2	The survey was conducted by Censuswide on behalf of HarbourVest Partners and polled 200 defined contribution plan sponsors in October 2025. Please note not all respondents answered each question. The research examined perceptions of private market investing within DC plans, including confidence in outcomes, education needs, and regulatory considerations. Not representative of any HarbourVest fund, account, and is not representative of any HarbourVest investment experience. Participants were offered certain compensation incentives to respond. These incentives were in no way linked to HarbourVest and were provided solely by Censuswide.
^3	Standard deviation of excess returns. Assumes market volatility of 8%. As of January 10, 2024. Period Q4 2008 – Q2 2023. Source: HarbourVest investment, monitoring, and due diligence activities. Not representative of any HarbourVest fund, account, and is not representative of any HarbourVest investment experience. Gross of management fees and carried interest.
^4	Bain & Company. Global Private Equity Report 2025. Bain & Company. March 2025. https://www.bain.com/insights/topics/global-private-equity-report/