Speaking at the WSJ Invest Live event in West Palm Beach, Florida, Josh Harris cautioned against the growing industry push to channel ordinary savers' retirement funds into private markets. Harris, who co-founded Apollo - now one of the world’s largest alternative asset managers - before leaving to start 26North Partners, said the move to recruit retail capital could create problems for both individual investors and broader market participants.
“Retail money is the last big pocket of capital, and so everyone’s going after it,” Harris said. “My own view is that it’s not going to end well.” He stressed that many retail investors “don’t understand that some of these new structures may not be liquid when things go wrong and they need the money.”
Harris outlined the structural differences that have traditionally kept alternative assets like private equity within the realm of large, sophisticated investors. Those vehicles typically lock up capital for extended periods compared with publicly traded stock and bond funds, and their valuations are often updated on a monthly or quarterly cadence rather than continuously. That combination of longer lock-ups and infrequent pricing can create mismatches for investors who require quicker access to funds.
Industry participants and some policymakers have argued for increasing retail retirement exposure to private markets, citing the potential for higher returns that may help support an aging global population likely to experience longer lifespans. At the same time, Harris noted that private capital firms have pursued retail investors in part because a slowdown in dealmaking reduced distributions and made institutional limited partners more hesitant to commit additional capital.
He also pointed to early signs of strain in retail-facing alternative products. “Some funds that are set up to give retail investors access to alternative assets, including by Blackstone and Blue Owl, have faced investor jitters,” Harris said, highlighting that the transition to broader distribution has not been without complications.
Harris urged the industry to improve investor education but expressed doubt about how effectively that is being done. “I hope that we as an industry do a better job than we’ve done historically in educating people about the risks,” he said. “But I fear, and what I see, is that we’re not doing that.”
He also described a dynamic that can arise when retail capital flows into private funds: institutions such as pension funds and endowments are able to commit capital for extended periods and can afford to wait for long-term returns. Retail investors, by contrast, often need returns more quickly, which can create pressure on managers to invest 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.”
Harris’ remarks underscored concerns about liquidity, investor understanding, and the potential impact on returns as the private markets industry seeks to broaden its investor base beyond traditional institutional limited partners.