How LPs Are Pushing Real Assets Like Farmland and Timber Closer to 401(k) Plans

How LPs Are Pushing Real Assets Like Farmland and Timber Closer to 401(k) Plans

How LPs Are Pushing Real Assets Like Farmland and Timber Closer to 401(k) Plans

Posted on by gterzo

By Gerelyn Terzo, Global AgInvesting Media

For decades, 401(k) plans have been built almost entirely around public markets, steering retirement savers toward traditional assets like stocks, bonds and mutual funds while leaving private assets on the sidelines. A sea change is now underway. As plan sponsors look to improve diversification and long-term outcomes, real assets such as timber and farmland are moving closer to the center of the conversation, alongside private markets like real estate and private credit, within defined contribution retirement plans.

This evolution stems from a growing recognition that private markets can fortify retirement portfolios by tapping into segments of the economy absent from public equities and bonds. For investors interested in sustainable, tangible assets, timber and farmland offer compelling real assets. These categories, often classified under natural resources or alternative real asset, boast unique features that align well with the long-term horizons of 401(k) participants, who typically accumulate savings over decades without needing immediate liquidity

According to a recent report from Nuveen, interest in blending public and private investments within 401(k) plans is picking up as the retirement industry looks to borrow ideas long used by large pensions and endowments. Rather than adding private assets as standalone options, chief investment officers are increasingly finding ways to weave them into actively managed solutions such as target-date funds or managed accounts, where liquidity and risk can be more carefully managed. The shift points to a broader reassessment around how retirement portfolios are built and reflects a growing push to offer mainstream investors access to asset classes that were once limited to institutional players.

Asset management giant Blackstone is teeing up, making a strategic push into the retirement space with a new business unit aimed at broadening access to private markets through defined contribution retirement plans like 401(k) schemes. The expansion, launched within Blackstone’s private wealth division that oversees about $280 billion, is focused on developing products and partnerships to bring private equity, real estate, private credit and other alternatives into 401(k) structures. Industry experts suggest this could unlock a significant pool of retirement capital for less traditional asset classes (think agriculture) while critics caution that complexity, liquidity and fee issues remain hurdles as firms explore how to integrate real assets and private strategies into long-term portfolios

Headwinds and Tailwinds

The most immediate headwind to bringing private market assets into 401(k) plans, particularly real assets such as farmland and timber, is liquidity. Unlike publicly traded stocks or bonds, these investments can’t be sold quickly or easily, and exits often depend on market conditions, deal timing and market demand. For retirement plan sponsors, that results in uncertainty around cash flows, valuation and retirement plan participant withdrawals in a structure built around daily pricing.

At the same time, those very characteristics can turn into tailwinds when viewed through a long-term retirement lens. Defined contribution retirement plans are designed for multi-decade investing, which can align well with the long holding periods that lend themselves to farmland and timber strategies. The illiquidity premium associated with these assets has historically translated into higher yields and more stable cash flows, while public market volatility ebbs and flows, according to the Nuveen report. Even if a slice of a 401(k) portfolio is allocated to private real assets, participants could still maintain access to liquid public investments, helping balance flexibility with long-term diversification.

Ag Demand

With these forces in mind, GAI News would like to capture this momentum by expanding upon our coverage of LP activity in the agricultural industry. To kick things off, here’s a roundup of some of the most recent activity involving real asset mandates that extend to the ag space.

  • The State of New Jersey Department of the Treasury, Division of Investment has issued an RFP in search of an investment consultant for the Department of Investments’ Real Assets portfolio, which includes agriculture/farmland and timber. The submission deadline for these serves is March 6, 2026.
  • The Orange County Employees Retirement System (OCERS), which oversees $24.5 billion in total assets under management, has reportedly earmarked $350 million for real assets investments, with plans to expand into timber and agriculture assets for the first time.
  • Last year, the Kansas Public Employees Retirement System committed over $400 million in separate timberland asset manager mandates to the Lyme Timber Company and BTG Pactual.
  • Gresham House recently closed on more than €250 million in initial commitments for its Sustainable International Forestry Strategy Platform, welcoming anchor capital from Australia’s NGS Super and the U.K.’s Worcestershire Pension Fund, which joined the LP lineup in pursuit of greater natural capital exposure.
  • Acting on behalf of Dutch pension fund ABP, APG Asset Management has taken a controlling stake in a 70,000-hectare sustainably managed forestry asset in the southern U.S.. ABP is eyeing the contribution of nearly 2 million tons of standing forest carbon over 15 years, supporting its goal to deploy €11 billion into climate and biodiversity impact investments by 2030.

New Frontier

The push to incorporate private markets into 401(k) structures is less about chasing short-term returns and more about building portfolios that can better withstand a perfect storm of inflation, volatility and changing market cycles. Real assets like farmland and timber sit squarely within that strategy, offering inflation-linked cash flows, long-duration income and diversification features that traditional public markets don’t always provide.

What’s emerging is a broader convergence between the strategies typically harnessed by large public pensions and the investment frameworks shaping the next generation of retirement plans. As plan sponsors and investment committees grow more comfortable navigating liquidity constraints and valuation considerations, agriculture and natural capital are increasingly viewed not as niche alternatives but as foundational building blocks in long-term portfolios.

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