The offices of Blue Owl are in New York on Saturday, April 4, 2026. (AP Photo/Ted Shaffrey)
Copyright 2026 The Associated Press. All rights reserved.
There’s been increasing interest on Wall Street to open private investments — private equity, debt, real estate, or other financial instruments or assets not on public exchanges — to retail investors. That’s the industry term for regular people who invest.
This type of initiative happens from time to time, like when President Donald Trump signed an executive order, “Democratizing Access to Alternative Assets for 401(K) Investors,” on August 7, 2025. Here’s the policy statement:
“It is the policy of the United States that every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity for plan participants and beneficiaries to enhance the net risk-adjusted returns on their retirement assets.”
It might sound like a great opportunity to some. Finally, you have an opportunity to get the same types of returns as big investors. Your future will be more certain.
However, the results of such private investments are far from predictable. There are significant returns to be made, but also tremendous losses. There are four general issues that any investor, including individuals, needs to address.
Opacity
Effective investment has to sit on a foundation of knowledge. Not perfect knowledge, but enough information to make intelligent decisions about potential returns and risks. Private markets, by their nature, often lack clear information. There aren’t the extensive filings that publicly held companies must provide under U.S. law. It’s not like stock prices that are repriced regularly because you can see data about the trades. Bonds are constantly marked to market, so you can see what their value is at any given time. Real estate? It’s typically held for years. Understanding the current valuation is a challenge.
There is a second aspect to opacity. Investors in a private fund largely depend on the provided prospectus. There is no way to know how fund managers define the values of their investments and, not all, but some portion likely massage numbers to make their offerings sound more appealing.
A finance site named Market After Hours pointed out that private equity funds tend to have 10-years terms. When investors want to exit early, they sell stakes on secondary markets, which show what institutional buyers pay “when they have full access to underlying portfolio data.” In 2023, funds traded at an average of 68% of their stated net asset value (NAV).
“Buyers with complete information about portfolio companies, cash flows, and business prospects refused to pay more than 68 cents for assets funds claimed were worth a dollar. That’s a 32% discount. Not 5%. Not 10%. Thirty-two percent,” they wrote. The bolding was theirs.
Oof.
Illiquidity
The mention of secondary markets brings up the issue of liquidity, or its antithesis, illiquidity. The funds aren’t easily traded like bonds or equities. For an institutional investor or someone with large net worth, that might not be an issue. They can hold the asset and depend on other investments for cash flow.
For regular people, this is a potential problem. If you have an expected event like approaching retirement or higher education bills, or something unexpected like an illness, you might need to pull cash out, and you may not be able to.
For example, “At least five major private credit managers have limited investor withdrawals from semi-liquid funds since the beginning of 2025,” wrote Investment Executive. “Moves by Apollo Global Management, Blackstone, Blue Owl Capital, BlackRock and Morgan Stanley have underscored the liquidity strains built into the fast-growing asset class.”
You’re The Product
This is the part that might sting most. Again, the following point isn’t universal, but often large asset holders look to pass along “opportunities” to regular individuals when they need additional volumes of capital and have run out of what sophisticated institutional investors are willing to offer.
A slightly different example is initial public offerings. The insiders, including favorite clients of involved banks, get preferred pricing. The plan is then to use marketing and hype, so once the IPO happens and shares can be sold over existing exchanges, there will be a price pop and insiders can sell off a portion of their holdings to make a profit, sometimes underwriting the initial investment.
Facebook’s IPO was a perfect example because the shares didn’t get the first-day pop many counted on. Instead, the pricing seemed to reflect how the market valued the company. Early investors weren’t happy about it because they couldn’t pass on shares and pull money from retail investors.
Always be wary when all you hear is how terrific everything.
