Institutional investors have recognized that they haven’t any power to curb the worst behavior of fund managers and are aware of the excessive compensation these fund managers receive relative to their actual performance.
Some of the larger LP investors – including pension fund managers similar to BlackRock and Canada Pension Plan, Singapore’s sovereign wealth fund GIC and Australian bank Macquarie – have scaled back their commitments to external fund managers and opted to construct in-house alternative asset management divisions.
In turn, private capital fund managers have sought other sources of financing. The largest corporations obtain their perpetual capital from their very own insurance vehicles.[18] This eliminates the necessity to commonly go to the market to acquire fresh funds. But perpetual pools of capital are only one example of easy money.
The retail route is one other priceless route. A less demanding than institutional LPs. No small investor could apply for an observer seat on the advisory board of a personal corporation. No one would ever gain enough influence to challenge the extent of commissions. No one may have the means to observe or investigate a fund manager’s investment decisions. You will likely be forced to depend on brokers and other intermediaries, resulting in further commissions and agency problems.
Retail investors are more likely to be much more accommodating than institutions in terms of increasing carried interest or eliminating hurdle rates. In short, they provide all the advantages of institutional money without lots of the inconveniences.
A recent report from PitchBook says of the chance to realize exposure to personal markets: “For some allocators, the added complexity and illiquidity will be justified by diversification and alpha potential; for others, remaining in public markets may prove to be the more appropriate route.”[19]
Until private capital is subject to greater oversight and offers higher terms when it comes to fees and capital gains allocation, in addition to more liquid secondary markets, retail investors could be higher off remaining in the general public markets.
[1] https://www.businessinsider.com/trump-private-equity-retirement-plan-risk-401k-retail-investor-warning-2025-7
[2] https://global.morningstar.com/en-gb/funds/private-market-investing-what-is-long-term-asset-fund
[3] https://www.efama.org/policy/eu-fund-regulation/european-long-term-investment-fund-eltif
[6] https://www.caisgroup.com/articles/the-evolution-of-the-private-equity-secondary-market
[7] https://www.privatecapitalsolutions.com/insights/unpacking-private-credit-secondaries
[9] https://pitchbook.com/news/reports/q4-2025-pitchbook-analyst-note-the-new-face-of-private-markets-in-your-401k
[12] https://www.ft.com/content/221e5dd4-6d99-48fb-af4d-4326fe61c37a
[13] https://www.amazon.com/Good-Bad-Ugly-Private-Equity/dp/1727666216/
[14] https://www.ft.com/content/e9372527-1c88-4905-86f4-3b8978fd2baa
[19] https://pitchbook.com/news/reports/q4-2025-allocator-solutions-are-private-markets-worth-it
