Rush into private equity leaves retail savers exposed on liquidity and risk education
A private equity veteran is warning that the industry’s new hunt for everyday savers could “hurt returns for everyone,” including long-term investors.
Josh Harris, who co-founded Apollo before launching 26North Partners, said retail investors now represent “the last big pocket of capital, and so everyone’s going after it,” Reuters reported from the WSJ Invest Live event in West Palm Beach, Florida.
He added: “My own view is that it’s not going to end well.”
Harris argued that many individual investors “don’t understand that some of these new structures may not be liquid when things go wrong and they need the money.”
Alternative assets such as private equity have traditionally locked up money longer than publicly traded stock and bond funds, with valuations often set monthly or quarterly rather than in real time.
The shift to retail is coming as private capital firms respond to a dealmaking hiatus that has reduced payouts and cooled institutional appetite for adding more capital, according to Reuters.
Some funds built to give retail investors access to alternatives — including vehicles from Blackstone and Blue Owl — have already faced investor jitters.
Harris contrasted institutional investors such as pension funds and endowments, which “commit capital for a long time and can afford to wait for returns,” with retail investors who need quicker access and outcomes.
That dynamic can increase pressure on money managers to put new inflows to work rapidly.
“Retail money pours in, you get the money up front that has to get invested very quickly, and it definitely hurts returns for everyone,” he said.
He also called out the industry’s responsibility around disclosure and education.
“I hope that we as an industry do a better job than we’ve done historically in educating people about the risks,” Harris said. “But I fear, and what I see, is that we’re not doing that.”
