ERISA Fiduciary Implications of Investing in Alternative Assets Taken up by Supreme Court
On January 16, 2026, the U.S. Supreme Court granted certiorari in Anderson v. Intel Corporation Investment Policy Committee, a case that could provide fiduciaries with much needed clarity about the fiduciary implications under the Employee Retirement Income Security Act of 1974 (“ERISA”) of including alternative assets (e.g., hedge funds, private equity, and private credit) in retirement plan offerings. The Court’s review arrives at a pivotal moment, as regulatory initiatives and market forces are converging to dramatically increase the availability and inclusion of such investments in ERISA plans. We explain below why these developments matter for employers, plan fiduciaries, and investment advisers, and highlight practical steps they should consider now to protect themselves in this rapidly evolving environment.
TL;DR: The Supreme Court will hear Anderson v. Intel, a case that could reshape how ERISA fiduciaries evaluate and select alternative investments like private equity and hedge funds for retirement plans. The case arrives amid significant regulatory activity, including President Trump's August 2025 Executive Order directing the DOL and SEC to reduce barriers to alternative investments in 401(k) plans and pending DOL rulemaking on fiduciary duties in investment selection. The Court's decision—expected to address whether plaintiffs must identify a “meaningful benchmark” to challenge investment decisions—could either increase litigation risk for fiduciaries offering alternative investments or provide greater protection for well-documented investment decisions. Plan sponsors and fiduciaries should use this time to review their investment selection processes, ensure thorough documentation, and assess participant disclosures regarding any alternative investments currently offered.
ERISA’s Duty of Prudence and Alternative Assets
ERISA fiduciaries must comply with the duty of prudence articulated in section 404(a)(1)(B) and its implementing regulations, pursuant to which plan fiduciaries must meet a prudent standard of care, and have duties to prudently select and monitor any designated investment alternative under the plan, and liability for losses resulting from a failure to satisfy those duties.[1]
ERISA fiduciaries of participant-directed individual account plans, such as 401(k) plans, have decades of experience in applying this standard of care to mutual funds, which are a type of open-end investment company governed by the Investment Company Act of 1940.[2] However, meeting that standard of care could prove more challenging in evaluating investments in alternative assets.[3] For example, when compared to mutual funds, private funds can involve more complex organization structures and investment strategies, longer investment horizons, limited liquidity, less transparent valuation methodologies, and more complex and typically, higher fee structures.[4] Under ERISA’s duty of prudence, plan fiduciaries will be judged on whether they have appropriately considered the alternative asset’s particularized characteristics and evaluated its risks and benefits.
Increasing Availability of Alternative Assets in ERISA Plans
Industry dynamics and regulatory initiatives have converged to increase the relevance of alternative assets for ERISA plan fiduciaries. Over the last year, industry observers have noted that institutional investors, including pension funds, have faced substantial difficulty exiting private investments, at least in part because funds have struggled to attract new investors and complete exits.[5] This constrained exit environment has increased industry interest in broadening the investor base for private funds to include the approximately $13 trillion defined contribution market.
The Trump administration responded to this interest with a concerted regulatory push. Last August, President Trump issued an Executive Order (the “EO”) directing the DOL and the SEC to reduce regulatory barriers limiting participants’ access to private equity, real estate, digital assets, and other alternative assets.[6] Noting that “burdensome lawsuits” and “stifling Department of Labor guidance” have denied millions of Americans opportunities to benefit from alternative asset investments, the EO directed the Secretary of Labor to, within 180 days, clarify fiduciary duties when offering asset allocation funds containing alternative assets and to propose rules, including potential safe harbors, that may “curb ERISA litigation that constrains fiduciaries’ ability to apply their best judgment.”
On January 13, 2026, the Department of Labor took a significant step in responding to the EO, submitting a draft rule proposal to the Office of Information and Regulatory Affairs.[7] While OIRA has up to 90 days to review the proposal, some expect that it will act faster in order to meet the EO’s 180-day deadline (which would mean we could expect the rule to be published by February 7). Once the proposal is published in the Federal Register, the public will be provided with a period to comment on the proposal. After that comment period, the agency would then move to reviewing the comments and finalizing the rule.
The SEC has also taken a number of steps to facilitate broader access to private market investments. The EO specifically noted that this facilitation may include, but was not limited to, revisions to existing regulations and guidance relating to accredited investor and qualified purchaser status. Shortly after the EO was issued, the SEC’s Division of Investment Management published Accounting and Disclosure Information 2025-16. For over twenty years, IM staff had provided comments to registrants that registered closed-end funds that invest in private funds would need to either limit their offers to investors meeting the accredited investor status under Regulation D under the Securities Act of 1933 and have a required minimum investment of at least $25,000, or limit their private fund investments to 15 percent of their assets. ADI 2025-16 stated that IM staff would no longer provide those comments, which had the practical effect of allowing registered closed-end funds that invest more than 15 percent of their assets in private funds to accept investments from investors that do not meet the accredited investor standard or the minimum investment requirement. To date, the SEC has not proposed any rulemakings in response to the EO.
Anderson v. Intel
Against this backdrop, the Supreme Court has agreed to review a case that promises to address some fiduciary implications of investing in alternative assets. Winston Anderson is a former Intel employee and participant in two of Intel’s ERISA-governed retirement plans. Through these plans, Mr. Anderson was invested in two kinds of customized funds which were the default investments in the plans: the Global Diversified Fund (“GDF”), and several blended target date funds (“TDFs” and with the GDF, the “Funds”). Mr. Anderson sued his plans’ fiduciaries (the “Fiduciaries”) in 2019 in a putative class action, alleging that they breached their duties of prudence and loyalty under ERISA by including in the Funds unreasonably large allocations to hedge funds and private equity funds, exposing participants to, among other things, excessive risks, higher and less transparent fees, and significant underperformance compared to traditional investment options.[8]
The Fiduciaries have explained that their investment strategy was a response to the 2008 financial crisis, which caused many participants in equity-focused retirement funds to lose a significant portion of their retirement assets. To address this risk, they adopted a strategy of “risk-mitigation” in place of “return-maximization,” creating customized, broadly diversified portfolios that included, along with stocks and bonds, holdings in hedge funds and private equity funds that were designed to reduce investment risk by investing in assets whose returns are less correlated to equity markets. The Fiduciaries disclosed to participants that this risk-mitigation approach would deliver lower returns during a bull market than equity-heavy funds and would carry higher active management fees.
Both sides point to the Funds’ performance to support their cases. The plaintiffs asserted that the Fiduciaries’ investment strategy had “disastrous” results for the plans’ participants, resulting in millions in losses to the plans’ participants. With regard to costs, the complaint noted that the TDFs’ expense ratio was more than double the average for target-date funds by 2014, and the GDF’s ratio was nearly four times the average for non-target date balanced funds. Further, the TDFs consistently underperformed comparable mutual funds provided by Vanguard and Fidelity, as well as “category benchmarks” published by Dow Jones, S&P, and Morningstar. For their part, while acknowledging that the Funds did not keep pace with the returns of funds with greater equity exposure, the Fiduciaries contend that the Funds performed as intended. For example, from 2011 through 2018, the Funds produced positive returns while cushioning participants against stock market volatility while the GDF exceeded its target of a 5% annual return and outperformed 80% of the largest funds in the Morningstar World Allocation Category between 2008 and 2018.
In January 2022, a district court in the Northern District of California dismissed the complaint, holding that Mr. Anderson failed to provide a “meaningful benchmark” against which to compare the Funds.[9] With regard to the TDFs, the complaint was deficient because the plaintiff offered comparators that only included information about “generic TDF features” (such as being long-term investment vehicles consisting of a combination of asset classes, and having a glidepath that reduces risk over time) rather than including “information regarding the investment strategies, glide paths, and fees of any specific TDFs with the same target date as the Intel TDFs.”[10]
The Ninth Circuit affirmed, observing that there are a “myriad of circumstances” through which a plaintiff could assert that a fiduciary violated the prudence standard, either through allegations “directly showing that the fiduciaries employed unsound methods in making their investment decisions,” or by making “circumstantial factual allegations from which the court may reasonably infer from what is alleged that the process was flawed.”[11] The court found that where a plaintiff relies on a circumstantial theory of imprudence that is premised on underperformance and higher fees when compared to other funds, “[t]he need for a relevant comparator with similar objectives—not just a better-performing plan or investment—is implicit in ERISA’s text.”[12] Judge Berzon concurred in the opinion, but wrote separately to clarify that “although ERISA's standard of prudent conduct is defined by comparison, a plaintiff need not plead facts about a ‘prudent man’—or his investment decisions—to establish a comparator and so show that the comparative legal standard has been violated.”[13] Notably, also pending before the Supreme Court was a petition to review the Sixth Circuit’s decision in Johnson v. Parker-Hannifin Corp., in which that court held, inter alia, that plaintiffs are not always required to identify a higher-performing fund to demonstrate a claim of imprudence under ERISA.[14]
On January 16, 2026, the Supreme Court agreed to review the Anderson case to address the following question:
Whether, for claims predicated on fund underperformance, pleading that an ERISA fiduciary failed to use the requisite “care, skill, prudence, or diligence” under the circumstances and thus breached ERISA’s duty of prudence when investing plan assets requires alleging a “meaningful benchmark.”
The Court’s resolution of this matter could have significant implications for imprudence claims, particularly those that involve alternative asset investments. If the Court affirms the Ninth Circuit and requires plaintiffs to identify meaningful benchmarks (with similar aims, risks, and potential rewards to the challenged funds) at the pleading stage, plan fiduciaries would have greater ability to seek early dismissal of lawsuits challenging alternative investment selections. This could reduce litigation risk and offer some encouragement to fiduciaries considering broader adoption of such investments, particularly given the often-bespoke nature of such funds and the difficulty plaintiffs have historically had in identifying comparable funds. If the “meaningful benchmark” standard is adopted, the most likely consequence is that plaintiffs will focus their efforts on scrutinizing fiduciary processes in selecting and monitoring alternative asset investments. On the other hand, if the Court reverses and permits imprudence claims to proceed without meeting the Ninth Circuit’s meaningful benchmark standard, fiduciaries will likely find it more difficult to dispose of imprudence claims at the motion to dismiss. This may have a chilling effect on fiduciaries’ appetite to adopt alternative asset investments. The DOL’s forthcoming regulatory proposal may also shape how the Court’s decision affects practice. If the DOL establishes a clear and defensible safe harbor, fiduciaries may have clearer pathways for prudent inclusion of alternative assets regardless of the outcome.
What Should Fiduciaries Do Now?
Regardless of the Court’s decision in Anderson, ERISA litigation alleging imprudence in offering alternative investments is likely to increase. Suits that proceed past the motion to dismiss stage will ultimately focus on process. Accordingly, fiduciaries should ensure that they are adequately documenting their investment selection processes and rationales-including detailed analysis demonstrating that the higher fees associated with private funds are justified by their expected risk-adjusted returns. Employers, plan fiduciaries, and their investment advisers, should consider consulting legal counsel about the following:
Review and document investment selection processes for any alternative assets currently in the plan, ensuring that decision-making procedures and rationales are thoroughly memorialized. This should also entail a review of key plan documents (such as an investment policy statement, if applicable) to ensure consistency.
Review the extent to which the plan may already be invested in alternative asset investments. Owing to some of the regulatory changes described above, ERISA plans may already be invested in alternative assets beyond the expectations of the fiduciaries. Take this opportunity to understand the particular asset classes (e.g., private credit, private equity, crypto) and vehicles (e.g., private funds, registered evergreen funds) in which the plan is invested, and evaluate whether the existing fiduciaries responsible for selecting and monitoring alternative asset investments have sufficient expertise, keeping in mind the particular characteristics of the asset classes and vehicles involved. Consider whether responsibilities should be delegated to an ERISA section 3(38) investment manager who assumes fiduciary responsibility for investment decisions and ensure that there are proper steps in place for monitoring the investment manager.
Assess current participant disclosures regarding any alternative assets, ensuring participants have adequate information regarding the characteristics, risks, and fee structures of these options-including a clear explanation of management fees, carried interest, hurdle rates, and how these costs compare to traditional investment alternatives.
If you have questions about this Client Alert or are interested in additional details or guidance, please reach out to Michael Khalil (michael.khalil@pierferd.com) or your regular PierFerd contact for assistance.
This publication and/or any linked publications herein do not constitute legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, the author(s) and PierFerd assume no liability whatsoever in connection with its use. Pursuant to applicable rules of professional conduct, this publication may constitute Attorney Advertising. © 2026 Pierson Ferdinand LLP.
[1] See 29 U.S.C. § 1104(a)(1)(B) (requiring fiduciaries to exercise “the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims”); see also 29 CFR 2550.404c-1(d)(2)(iv) and 29 CFR 2550.404c-5(b).
[2] Among other characteristics, mutual funds must comply with requirements under the Investment Company Act of 1940 designed to provide comprehensive disclosure and valuation, strict conflict-of interest limitations, liquidity and leverage controls, and board oversight protections.
[3] Alternative assets can include private market investments (such as private equity and hedge funds, investments in private, non-traded companies, as well as private credit instruments), direct and indirect interests in real estate, holdings in actively managed investment vehicles that invest in digital assets, commodity investments, infrastructure financing interests, and lifetime income investment strategies.
[4] See Department of Labor Employee Benefits Security Administration Information Letter to Jon W. Breyfogle (June 3, 2020).
[5] See, e.g., Private Equity: In the Doldrums and Out of Favor with Some Institutional Investors, E. Appelbaum, Center for Economic and Policy Research (Jan. 7, 2026).
[6] See Democratizing Access to Alternative Assets for 401(k) Investors (August 7, 2025).
[7] The proposed rule submitted to OIRA was titled “Fiduciary Duties in Selecting Designated Investment Alternatives.”
[8] In 2020, Mr. Anderson’s suit was consolidated with two related cases involving the same Fiduciaries and Funds, one of which has already resulted in a decision from the U.S. Supreme Court. See Intel Corp. Inv. Pol’y Comm. v. Sulyma, 589 U.S. 178 (2020). In that case, the Fiduciaries alleged that because the plaintiff had been provided with disclosures regarding the Funds’ investment in alternative assets as early as 2011, the 2016 suit was time barred by ERISA section 502(2)’s time bar, which requires that a suit must be filed within three years of “the earliest date on which the plaintiff had actual knowledge of the breach or violation.” 29 U.S.C. 1132(2). In Sulyma, the Court held that for purposes of section 502(2), it was not enough to show a plaintiff had received the underlying information, because “actual knowledge” requires that a plaintiff must in fact have become aware of the information in question. See Sulyma, 589 U.S. at 187.
[9] See Anderson v. Intel Corp. Inv. Pol’y Comm., 579 F. Supp. 3d 1133, 1147 (N.D. Cal. 2022) (“When plaintiffs allege that a defendant has breached the duty of prudence because ‘a prudent fiduciary in like circumstances would have selected a different fund based on the cost or performance of the selected fund, [plaintiff] must provide a sound basis for comparison—a meaningful benchmark.’”) (quoting Meiners v. Wells Fargo & Co., 898 F.3d 820, 823 (8th Cir. 2018)). The district court held that a meaningful benchmark must “have similar aims, risks, and potential rewards to a challenged fund.”
[10] Anderson v. Intel Corp. Inv. Pol’y Comm., 579 F. Supp. 3d at 1150.
[11] Anderson v. Intel Corp. Inv. Pol’y Comm., 137 F.4th 1015, 1021-22 (9th Cir. 2025).
[12] Id.
[13] Id. at 1028 (observing that while a relevant DOL regulation, 29 CFR 2550.404a-1(b), “requires the fiduciary to make a comparison and to evaluate the relative costs and benefits of different investments[, i]t does not set forth a pleading requirement for plaintiffs alleging that the fiduciary breached her duty.
[14] See Johnson v. Parker-Hannifin Corp., 122 F.4th 205, 216 (6th Cir. 2024). The Sixth Circuit found that the plaintiff in the case before it had nevertheless provided a meaningful benchmark by alleging that the funds at issue were “designed to meet industry-recognized benchmarks,” and then comparing those funds to the S&P target date fund benchmark, which the plaintiff asserted was the relevant industry-accepted target date benchmark for the kind of target date funds at issue.
