The potential for individual investors to enter private markets is currently under active discussion by regulators. A key concern is whether the current structure of these markets is robust enough to handle an influx of retail capital, particularly given their inherent characteristics of limited liquidity and less transparent performance reporting.
New legislative initiatives are advocating for unrestricted access to private capital for all investors. However, a significant hurdle lies in the difficulty of accurately assessing the true performance of these markets. Reported returns often lack clarity, making precise benchmarking a challenge. For example, in the private equity sector, the typical internal rate of return (IRR) targets have seen a notable decrease, falling from roughly 25% at the turn of the millennium to about 15% in the present day. This trend suggests a maturing market with increased competition and potentially diminished returns for new entrants.
Ensuring equitable access to diverse investment opportunities is a commendable goal, but it must be balanced with robust investor protection. As the financial landscape evolves, careful consideration of market dynamics, transparency, and investor readiness will be paramount in shaping policies that empower individuals while safeguarding their financial well-being.