Private Credit Is Coming to 401(k) Plans. These Are the Alternative Asset Managers Set to Cash In.

Private credit sounds fancy, but it really isn't. Essentially, private credit businesses invest in the equity and debt of non-traded businesses. It's roughly similar to what happens in the public stock and bond markets, just without the liquidity that public markets offer. That said, there are material risks for investors to consider before making a private credit investment.

That's going to be increasingly important because private credit investments are likely heading to a 401(k) near you. Here's what to think about before investing in private credit, and a way to profit from the increased availability that doesn't require you to buy a private credit fund. (Hint: Blackstone (NYSE: BX), Apollo Global Management (NYSE: APO), and KKR (NYSE: KKR) all manage private equity investments.)

Image source: Getty Images.

Are higher potential returns worth the very real increase in risk?

Private credit invests in businesses that, for whatever reason, are not seeking funding in the public market. Often, the reason is that the company is too small or not profitable enough to tap the capital markets. Investing in early stage companies can offer higher long-term returns. But not every early stage company becomes a winner, and many fall by the wayside.

One particularly troubling issue to consider is the lack of liquidity in private credit markets. When a business is troubled, there may be nobody willing to buy its securities. Those who have invested in it simply end up with nothing. Moreover, during recessions and periods of rising interest rates, some private credit investments can struggle to cover interest payments.

Those are just some of the reasons why private credit has long been the purview of high-net-worth investors and institutions. Small investors who can't afford to risk their capital should think twice before making private credit investments, even if they are available in a 401(k). But many investors are likely to do so, anyway, noting that the 401(k) market is home to $14 trillion in assets, by some estimates. That will have a huge impact on companies that manage private credit funds.

Three options to consider in private credit

Three ways to invest in the private credit space without actually investing in a private credit fund are Blackstone, Apollo Global Management, and KKR. Each of these companies manages money on behalf of others, generating investment fees, with a material portion of their businesses devoted to private credit.

Blackstone is particularly well-positioned because of its long and successful history in private credit. The company's non-investment-grade strategies have returned 9.4% on an annualized basis through multiple credit cycles over the past 20 years. As of the first quarter of 2026, institutional investors and insurance companies accounted for 75% of Blackstone's private credit business, providing a strong foundation for growth as it opens up the platform to other investors. The company boasts over 90 investment strategies, ranging from non-investment-grade to investment-grade, enabling it to offer products that will appeal to a broad range of customers. At the end of the first quarter, the company had $1.3 trillion in assets under management.

Apollo is another well-respected company in the private credit space. The company's asset management operation is complemented by its retirement services business (Athene), which sells products such as annuities. The company's retirement services business typically focuses on investment-grade assets. That provides a strong foundation for the business as it looks to expand into the 401(k) market, with annuity products potentially helping build trust in the more aggressive investment options it offers. At the end of the first quarter, Apollo had just over $1 trillion in assets under management. Notably, Apollo has been working to increase the transparency of the private credit sector. That, too, should help build trust not just for Apollo, but for the entire industry as it enters a potential new growth phase.

KKR is smaller than Blackstone and Apollo, with roughly $760 billion in assets under management at the end of the first quarter. Like Apollo, KKR has an insurance and retirement business (Global Atlantic), which provides a solid foundation and an opportunity to build customer relationships. The company's investments are roughly evenly split between private equity, real estate, and private credit, diversification that could help smooth out its financial results over time. Notably, while the media has been filled with concerns around private credit, KKR's inflows doubled quarter over quarter in the first quarter. That suggests that investors are, indeed, looking to well-respected companies with long histories in the private capital markets as they invest in the space.

An alternative to a private credit investment in your 401(k)

For many, adding private credit to a 401(k) account may be a step beyond the comfort zone. That's not unreasonable. However, that doesn't mean you can't invest in the private credit sector's growth opportunity within the 401(k) market. Companies like Blackstone, Apollo, and KKR are strong options. Given their already large businesses and stature in the private credit market, now, before the 401(k) market cracks open, could be the time for a deep dive.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Blackstone and KKR. The Motley Fool has a disclosure policy.