President Donald Trump may soon sign an executive order allowing retirement plans to invest in private equity, a move that has raised concerns among experts due to the added risk it could introduce to retirement portfolios. Private equity firms have been lobbying for access to the $12 trillion 401(k) market.

Private equity investments, known for being illiquid and high-risk, have experienced explosive growth during the pandemic. The private equity industry is now eyeing the $12 trillion 401(k) market as traditional exit opportunities have dried up. The move to include private equity in retirement plans is part of a trend of combining public and private markets.

Retail investor participation in private markets poses systemic risks, according to Moody’s Investors Service. While some experts are skeptical about the increased presence of private equity in retail portfolios, it’s unlikely that private equity will comprise a large portion of people’s retirement plans. Experts project around 10% of retirement assets could go toward private equity over time.

Mixing complicated assets like private equity into retirement vehicles is a risky choice that could lead to suboptimal returns for retirees. Experts warn that retail investors require more liquidity, which could eat into private equity returns over the long term. It remains to be seen how the presence of private equity in retirement plans will impact Americans’ financial future.

Read more at Yahoo Finance: Trump could open up your 401(k) to private equity. Why market experts say it’s a bad idea.