The Securities and Exchange Commission is considering rules that could allow retail investment funds to charge performance fees when investing in private-market assets, a shift that would broaden access to a sector long dominated by wealthy and institutional investors.
• The proposal could give ordinary investors greater exposure to private equity, private credit and other alternative assets.
• Performance-based fees would let fund managers receive compensation tied to investment gains, potentially changing how retail products are structured.
• Supporters say the approach could expand investment choices and direct more capital toward private companies.
• Critics are likely to question whether individual investors can adequately assess the risks, limited liquidity and complex valuations associated with private markets.
• The SEC’s effort reflects the agency’s broader push to modernize investment rules as private assets become more prominent in portfolios.
Any final framework would need to balance expanded access with investor protections, including clear fee disclosures, valuation standards and safeguards against excessive risk.