Spotlighting Private Markets Education for Multiemployer Plans

We recently caught up with Head of Taft-Hartley Solutions Steve Binder to discuss the challenges and opportunities facing multiemployer benefit plans today. In this Q&A, we discuss the private markets investment landscape and how it can complement multiemployer benefit plans. 

Q: Before we dive in, how would you describe private markets in simple terms, and what do they offer that is unattainable with public markets investments alone?  

A: When I talk about private markets, I’m referring to companies or assets that are not listed on public exchanges. The main strategies include private equity, private credit, private real estate and infrastructure. Private markets investments often involve taking ownership stakes in privately held businesses or providing loans directly to them with the goal of improving the businesses to generate return potential. How? 

Private market fund managers differ from public stock and bond fund managers in both scope and impact. They don't just construct and oversee each fund. They also collaborate with company management who actively shape portfolio company strategy, drive operational improvements, and unlock long-term value. 

Private markets investments appeal to multiemployer benefit plans for a variety of reasons, including the ability to provide greater access to high-quality, revenue-generating assets than investing through the public markets alone. Today, 87% of U.S. companies with more than $100M in revenue are private, compared to just 13% which are public.¹ Globally, private companies represent a much larger and more diversified opportunity set for investors, whereas the number of public companies has continued to decrease over time. Incorporating private markets allocations into multiemployer benefit plans can help trustees to meet investment objectives beyond a 60% stock/40% bond allocation mix. 

Q: What are some of the key considerations for multiemployer benefit plans accessing private markets? 

A: There’s a notion among trustees that private equity is too risky relative to public equities. As it turns out, this generalization does not account for the larger opportunity set that I mentioned earlier. The diversification gained through private markets investing has historically increased returns and reduced volatility. We have also seen that incremental allocations to private markets investments can reduce overall portfolio risk. This allocation strategy can work well for achieving the investment goals of defined benefit plans, including real-world liquidity needs. 

Q: How can multiemployer benefit plans access liquidity from private markets assets? 

A: Defined benefit plans are structured for long-term investment horizons and their payout obligations need to be predicted with some certainty to report within Annual Funding Notices mandated by the Department of Labor. Historically, private markets investors have needed to be comfortable with locking up their capital for several years because traditional drawdown funds are generally invested over five-year periods with 10-year terms. However, with the evolution of newer investment solutions such as evergreen funds, multiemployer benefit plans have new ways to access private markets investments and get liquidity from privately held companies.  

Evergreen funds for private credit, secondaries and other private markets investment strategies tend to have lower investment minimums and can provide investors with liquidity on a quarterly and, in some cases, monthly basis. Multiemployer benefit plans exploring private markets solutions may want to consider evergreen funds, which can provide liquidity potential and meet their long-term investment objectives. 

Q: What recent private markets trends are changing the multiemployer benefit plan investment landscape?  

A: The private markets have seen some big changes lately, especially around access and transparency. As I mentioned, evergreen products are a great example—they’re designed to make it easier for more investors to participate in the private markets by offering benefits like greater liquidity optionality, lower investment minimums, and simpler administration requirements compared to traditional drawdown funds, which require greater administrative complexity and call capital over long periods.  

The private markets have also become more transparent, in recent years, giving investors a clearer line of sight into funds' portfolio companies and asset exposures, a capability at which our firm excels. By investing in technology that allows us to process data from investment managers and consolidate it for our clients, we can offer investment insight that was previously inaccessible.  

Another trend we've seen is that companies are staying private longer. Staying private enables companies to focus more on fostering long-term investor alignment and less on hitting short-term goals to please public markets. It also alleviates some of the burdensome regulatory reporting that going public requires. As private markets' size, scope and assets under management have increased over the last decade, portfolio companies have been able to raise more capital while staying private and, in turn, raised valuations; multiemployer benefit plans with private markets exposure can benefit from this trend too. 

Q: How does the Taft-Hartley Solutions team fit within the broader Hamilton Lane organization? 

A: Our team is comprised of 11 private markets professionals dedicated to multiemployer benefit plans. Our team is structured with a focus on relationship management and acts as a conduit to the full spectrum of Hamilton Lane resources, including investment, legal, portfolio management and reporting capabilities. We support all business functions for our clients, including strategic planning, investment diligence, day-to-day operations support, and provide access to private markets education and thought leadership. Through proactive communication and transparency, our team delivers comprehensive, tailored services designed to help clients achieve their investment objectives while benefiting from the scale and knowledge of our global platform. 

Want to learn more about private markets investing? Visit our Knowledge Center for educational content or have a Taft Hartley Solutions team member contact you.