(Reuters) -BlackRock is set to include private assets in its retirement plans as it expands into alternative investments, the world's largest asset manager said on Monday.

The move marks a significant shift in how retirement products are structured, bringing traditionally illiquid and high-fee private market investments into mainstream retirement portfolios.

The New York-based firm plans to offer a target-date fund - an age-based retirement investment that combines stocks, bonds and other assets - with allocations to private equity and private credit in the first half of 2026.

Retirement money is a core business for BlackRock and accounts for more than half of the money the company manages.

As a push towards that move, BlackRock is providing some public and private market offerings for a new target-date retirement fund offered by Great Gray Trust.

Great Gray, which offers retirement investment options and manages over $210 billion in assets, will use BlackRock's equity and fixed income index offerings as well as private equity investments for its fund.

The Wall Street Journal first reported the move earlier in the day.

BlackRock's approach would include a 5% to 20% allocation to private assets in the retirement plans, depending on the investor's age, according to a research paper released on Thursday.

While the demand for exposure to private assets has grown, some sponsors have concerns around adding them to retirement plans for reasons such as liquidity, transparency and litigation risk.

BlackRock CFO Martin Small said earlier this month there was a real pathway for private markets making their way into target-date funds, adding that it will take some regulatory support.

The firm estimates that adding private markets exposure to target-dated funds could increase returns by an additional 50 basis points each year.

BlackRock anticipates portfolios in the future will comprise 50% public equities, 30% public fixed income and 20% private markets.