Insights for the evolving Retirement Industry

Offering timely updates and insights on the retirement industry for service providers, plan sponsors, and registered investment advisors. 

Alternative Assets (28)—DOL Proposal and the Six Defined Factors: The Valuation Factor (1)

Key Points: As you might expect, the Valuation factor requires that fiduciaries determine that private, illiquid investments must be fairly valued.  It is probably not expected, though, that liquid investments, e.g., mutual funds and CITs holding only publicly traded securities, are also subject to the Valuation factor. The DOL’s proposed regulation on selecting investments, including alternative assets, 2026-06178.pdf, identifies six factors that should be considered in the process of selecting any investments for participant-directed plans, such as 401(k) plans and private sector 403(b) plans. The six factors are: Performance, Fees, Liquidity, Valuation, Performance Benchmark, and Complexity. The proposal describes each of those factors and provides 20 examples of their application. In earlier posts, I covered five of the factors—Performance, Fees, Performance Benchmarks, Complexity, Liquidity, and their examples. I now turn to the Valuation factor, which like the Liquidity factor is particularly important for the evaluation of private funds and other non-publicly traded assets. This article discusses the factor itself.   Follow up articles will cover the examples. The proposed regulation describes the Valuation factor as: (j) Valuation. The fiduciary must appropriately consider and determine that the designated investment alternative has adopted adequate measures to ensure that the designated investment alternative is

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