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Amidst the other recent headlines about his signature, you may have missed the news that Donald Trump plans to sign an executive order in the coming days that will allow defined-contribution plans like your 401k to include private market investments. If youre not the sort of person who views a mutual fund prospectus as light beach reading, this may sound like the kind of boring story that only your crypto-obsessed brother-in-law might care about. But this is serious business that could have repercussions on your retirementespecially if you’re not paying attention. This proposed policy could be sending us down the same bumpy road that knocked the tires off of company-sponsored pension plans, dramatically increasing retirement insecurity for most American workers. Heres what you need to know. Whats in the executive order? The specific details of the forthcoming executive order (EO) remain hazy. But most experts agree that the president will probably use the EO as an opportunity to formalize the 2020 Pantheon Ventures/Partners Group opinion letter from the Department of Labor. This letter, issued during Trumps first administration, suggests that private equity investment options could be included in defined-benefit plans (i.e., 401k and 403b plans and the like) as part of a target-dated fund or other managed fund. The letter also emphasizes that plan participants should not be able to directly access private equity investments. Its likely this letter may serve as a blueprint for the EO that crosses Trumps desk in the near future. Whats private equity? Private equity is an investment in a privately traded company by an accredited investor or group of investors who take on a controlling interest in the organization. Though typically lucrative, private equity investing is often characterized by a long time horizon and a lack of liquidity. Private equity firms often charge high fees and expenses, and they may not disclose conflicts of interest. Lets look at these specific characteristics: Private trading Private equity is an investment class that is not available to the general public. This is unlike shares in publicly traded companies that anyone can purchase on the open market. Accredited investors An individual may be considered an accredited investor if they have earned $200,000 (or $300,000 with a spouse) for each of the past two years, or if they have a net worth of over $1 million excluding their primary residence. This means youre only allowed to invest in private equity if you can be relatively sure you wont be completely wiped out if you make a single bad investment. Controlling interest Typically, private equity investors take a controlling interest in the company and work to actively manage the business in order to increase its value. Illiquidity Private equity investment requires a long time horizon and most private equity funds will impose limits on when an investor can withdraw their funds. These limits will often last years. Fee structure Private equity funds come with fees and expenses that can be confusing, opaque, or just plain undisclosed. Conflicts of interest Private equity firms can and do have interests that conflict with those of their investors and the funds they manage. Though the SEC has proposed stronger rules for Private Fund advisers, and the commission does enforce what it can, investors must remain vigilant for the possibility of conflicts of interest. So whats the problem with private equity? There are some very good reasons why defined-benefit plans have always been closed to private equity. At its best, private equity is an effective tool that can help companies restructure and position themselves for future growth. This is what Dell did in 2013. But too often, private equity functions more like the Bust Out episode of The Sopranos, where Tony drives his friend Daveys sporting goods store into bankruptcy by maxing out debt to purchase inventory the mobsters peddle for a profit. Sears and Toys R Us are two examples of companies that didnt survive their private equity adventures. Those two bankruptcies eliminated 70,000 jobs, and company pension plans were eventually frozen or terminated. Why add private equity to 401k plans? There are $12.2 trillion worth of assets in U.S. defined contribution retirement plans. Private equity would appreciate getting a foothold in an investment sector that has traditionally been cut off from non-accredited investors. Proponents of the idea claim that allowing 401k investors to include private equity in their defined contribution plans will give them the opportunity to enjoy the higher returns that are typically restricted to accredited investors. But detractors worry that private equity is too risky and illiquid an investment class to have in a workplace retirement planwhich is where an employee would take a hardship withdrawal during a tough economic time. Critics like Elizabeth Warren have called private equity predatory and demanded stronger regulations. Why not just ignore it? If investing in private equity isnt your cup of tea, it may seem reasonable to simply put the matter out of your mind. You just won invest in any of the private equity target-dated funds and your 401k will continue chugging along. The only issue with this plan is the fact that opening the door to private equity in our defined contribution plans will also make the employers sponsoring those plans more vulnerable. Under the Employment Retirement Income Security Act (ERISA), employers have a fiduciary responsibility to make sure the investment options in your 401k are prudent and that any fees are not onerous. Plan sponsors have traditionally been leery of private equity in 401k retirement plans because of their illiquidity, complexity, opacity, and high fees, which leaves them open to ERISA lawsuits. Considering the fact that ERISA lawsuits against excessive 401k fees have risen to a near record high in the past year, employers have good reason to be worried. Yes, this does mean that everything is working as planned. Employers are supposed to take fiduciary responsibility for their employees retirement plans, and when they dont, the workers can file ERISA lawsuits against themand win. So far, so good. But the creation of ERISA 50 years ago, including the much-vaunted litigation portion of the law, may have contributed to the decline of pension plans. If it ain’t broke . . . Placing even more complex fiduciary responsibility on the shoulders of employers could have similar unintended consequences that we cant yet see. Average 401k savings rates and balances have recently been at record highs. As pensions have declined, and more Americans are feeling nervous about the future of Social Security, do we really want to open up defined contribution retirement plans to a new class of under-regulated, risky investments? The average retirement investor simply has no need of private equity in their 401k.
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E-Commerce
Outdoor product company Yeti is best known for its coolers, but this summer, it has a surprise hit product that doesn’t having any cooling functionality at all. It’s a tote bag that’s been part of its existing product offering for yearsbut has gone viral on TikTok after taking a page out of the Stanley playbook, with product offerings that are colorful, accessorizable, and collectible. Launched in 2018, the durable, waterproof, $150 Yeti Camino Carryall Tote Bag isn’t new, but now dubbed the hottest mom tote of the summer, it’s taking on a new life as the sort of colorful must-have consumer product we’ve seen previously with the likes of Stanley cups or Trader Joe’s totes. At least one analyst credits the bag’s new level of popularity with a rise in stock price for the company, which reported quarterly sales of $351 million, up 3% from the same period last year. [Photo: Yeti] The bag’s hefty design is at the heart of its appeal. At 18.1 inches by 15.2 inches, the bag is big, “but not too big,” according to Yetis product page. And though it weighs barely more than 3 pounds empty, the tote’s oversize handles were built for carrying a lot at once, including bottles and half-gallon jugs that can be organized with deployable dividers. As its name implies (camino means road in Spanish), it’s tough and designed to be used on the go. “You can carry everything from firewood to kids’ sand tools to water for washing your hands after camping somewhere,” Yeti’s head of marketing, Bill Neff, told Fast Companys Jeff Beer in March. “Then you can hose it out. It became the super versatile piece for us.” The idea behind the Camino was Yeti cofounder Roy Seider’s, but not everyone at the company saw its potential at first. It was Yeti’s second bag product after branching out into the category in 2017, it and became a quick hit. “We didn’t know what it was going to be,” Neff said in March. “We thought it was going to skew female. No one really understood it, except for Roy, but we launched it and it was bananas how fast, for both male and female customers, it became the product that they used for everything.” For a company whose coolers have been called a luxury good for bros, though, the tote has offered an avenue to market specifically to women. Product images and TikTok videos tagged with the bag skew female, while colorways like influencer beige, pink, and cherry blossom cater especially to female tastes. As of this writing, all the fun colors are sold out on Yeti’s website and you can only order the Camino in boring colors: olive or navy. It’s clear the Camino is not just a bag for the outdoorsman anymore. It’s become a bag for moms too, as a heavy-duty, all-purpose utility purse or as a beach or diaper bag for long summer vacations or a quick trip to the park. It’s functional for sure, with room for everything, but like a dude donning North Face in the city, there’s an element of gorpcore in its appeal as an accessory. The ability to customize the bag with patches, charms, or Labubus, plus a rotating, limited-edition seasonal colorways, gives the product an extra edge on TikTok, where newness, exclusivity, and conspicuous consumption reign supreme. Yeti is now doubling down on bags. The company bought the Montana bag brand Mystery Ranch in January, and on its earnings call in May, CEO Matthew Reintjes credited the Camino specifically for helping Yeti’s strong quarter. “Yeti is bringing a unique point of view to this fragmented bag space supported by our strong design, brand and commercial engine,” Reintjes said. “We remain very optimistic about the massive global addressable market we see in front of us across premium bags, packs, and luggage.” Reintjes calls the Camino tote “the sleeper product” in Yeti’s portfolio. “It’s like the Swiss Army knife of bags,” he said in March. It’s more than just its versatility and durability, though, that have proven valuable for the company. Every brand is looking for its Stanley cup moment, and with the Camino tote, Yeti has found in its portfolio a product capable of viral TikTok infamy of its own.
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E-Commerce
Legos newest set is a replica of a Nintendo Game Boy, and its designed to tap into the millennial nostalgia thats ruling the cultural zeitgeist. The 421-piece set is the latest in a series of collaborations between Nintendo and Lego, which have included builds based on the Super Mario, Animal Crossing, and Mario Kart worlds. Currently, the Game Boy is available for preorder at a price point of $60; it will be purchasable online and in stores starting October 1. [Photo: Lego] According to a press release, the collectible is an almost one-to-one replica of the original Game Boy, standing at just over 5.5 inches tall and 3.5 inches wide. It comes complete with a control pad, A and B buttons, a contrast adjustment, and a volume dialessentially, all the elements youd find on the original device. The main drawback is that, tragically, the brick-based Game Boy is not playable. However, it does come with a Game Pak slot and two Game Paks (also made of Legos, of course) based on The Legend of Zelda: Link’s Awakening and Super Mario Land. The Game Paks come with lenticular screensor screens that use light deflection to mimic movementreplicating scenes from the respective games, so you can briefly pretend that its a functioning electronic. Legos Game Boy replica comes as 80s and 90s IP has flourished in pop culture. Movies like Barbie and Twisters, fast-food menu throwbacks, and the return of 90s fashion (like via the long-dead J.Crew catalog) have all brought millennial nostalgia into the limelight. [Photo: Lego] Theres also renewed interest in retro tech aesthetics, even among younger generations who werent around during the products heydays. In 2024, that meant product releases like Anduril founder Palmer Luckeys 90s-esque portable gaming device and a pager by Sega that only sends emojis. So far this year, the Commodore 64 PC has already made a comeback and the iPod Nano got turned into a design object. Now the Game Boy is on sale againif only in Lego form.
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E-Commerce
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