At The Money: Blurring the Lines Between Public and Private Investments

Summary of At The Money: Blurring the Lines Between Public and Private Investments

by Bloomberg

25m•May 22, 2026
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Overview of At The Money: Blurring the Lines Between Public and Private Investments

In this Bloomberg At The Money episode, Barry Ritholtz speaks with ETF expert Dave Nadig about how the once-clear divide between public and private markets has blurred. The discussion focuses on the growing use of investment wrappers—such as closed-end funds, interval funds, tender offer funds, and some ETFs—to give retail investors exposure to private assets like private credit, private equity, and venture capital. The conversation is skeptical of the trend, emphasizing that these products often trade liquidity for access, come with high fees, and rely heavily on opaque valuation methods.

Main Themes and Takeaways

The public/private line has not disappeared — it has shifted

  • The rules themselves have not fundamentally changed.
  • What has changed is that product issuers are becoming more aggressive in packaging private-market exposure as “retail-friendly.”
  • Investors are increasingly being sold access to private assets through public-market wrappers.

Retail investors are being targeted as exit liquidity

  • Nadig argues that when new private-market products are being marketed to retail, investors should ask: “Why now, and who is selling this?”
  • His view is that in late-cycle markets, retail often becomes the exit for institutional capital looking to cash out.
  • He is skeptical of the “democratizing private investing” narrative.

Private investing can work — but only for top-tier funds

  • The median private fund tends to do “okay,” but not enough to justify the higher fees and illiquidity versus public markets.
  • Only top-quartile or top-decile private funds tend to produce standout returns.
  • For most investors, the payoff may not justify the complexity.

How These Investment Wrappers Work

Closed-end funds

  • A closed-end fund raises capital once and then the capital pool is fixed.
  • Investors typically buy and sell shares with each other on the secondary market.
  • These funds often trade at a discount to net asset value (NAV) because liquidity is limited.
  • Example discussed: PSUS (Pershing Square), which launched as a traditional closed-end fund and has traded at a discount.

Interval funds and tender offer funds

  • These are designed to hold less-liquid or private assets while offering limited liquidity windows.
  • Investors may be able to redeem only periodically, such as quarterly, and often only up to a small percentage of holdings.
  • These funds are often positioned as ways to access private markets without fully locking up capital.

Non-traded private funds

  • Some funds never trade on an exchange at all.
  • They may offer very limited redemption opportunities or none at all.
  • Example mentioned: BREIT as a well-known non-traded structure.

ETFs and mutual funds with illiquid sleeves

  • Some funds use the 15% illiquid-asset allowance to include exposure to private companies.
  • Examples mentioned include funds with stakes in SpaceX and similar private names.
  • Nadig warns this becomes risky if redemption requests spike and the illiquid portion becomes hard to manage.

Risks, Costs, and Structural Problems

Liquidity mismatch

  • The biggest issue is that these products often promise more liquidity than the underlying assets can support.
  • Closed-end and interval structures can work only if investors accept limited or delayed access to their money.
  • Nadig emphasizes that if an asset cannot be priced and sold intraday, it should not be treated as liquid.

High fees

  • These products are often expensive.
  • Fees can start around 2% and climb higher once fund-of-fund expenses are added.
  • The result is frequently “fees on fees.”

Lack of transparency

  • Private assets are often marked infrequently and subjectively.
  • Nadig calls this “volatility laundering”: assets that are actually volatile are presented as stable because they are marked quarterly or using comparable-company estimates.
  • Investors often do not know exactly how the holdings are valued.

Discounts to NAV

  • Many closed-end funds trade below NAV because investors value liquidity and transparency.
  • Managers may not care much because they are compensated based on assets under management or NAV.
  • Activists sometimes push to buy back shares or liquidate assets to close the discount.

Why Some Investors Still Buy In

Manager skill and deal access

  • In the case of Bill Ackman’s Pershing Square, investors are betting on a concentrated, high-conviction strategy and Ackman’s reputation.
  • In venture/private credit products, investors are betting on access to deal flow before the broader market gets it.
  • The upside is real if the manager is exceptional or the private investment hits big.

Potential for outsized returns

  • Private markets can outperform if you get into the right fund or the right deal.
  • But the key problem is selection: most investors will not consistently access the winners.

Regulatory and Policy Concerns

Liquidity rules should be enforced

  • Nadig argues that regulators should enforce existing liquidity standards more strictly.
  • If something is not liquid enough for daily pricing and redemption, it should not be treated like a liquid asset in an ETF-like wrapper.

Independent valuations are needed

  • He wants independent valuation agents for private assets that are reaching the public market.
  • He also wants clearer published valuation rules, rather than letting boards decide marks with too much discretion.

Outlook: What Happens Next?

Expect a reckoning, not immediate collapse

  • Nadig expects some future event or fund blowup will expose the weaknesses in these structures.
  • He does not think the crisis will necessarily come from private credit right away, but he does expect some high-profile failures or forced unwinds in private equity/private credit products.

401(k) exposure is still likely farther off

  • He believes broad retirement-plan access to these products is not imminent.
  • For now, most of the money going in is still from investors with higher risk tolerance.

Bottom Line

  • These products often blur the line between public and private markets without fully solving the underlying liquidity problem.
  • They are usually:
    • Expensive
    • Opaque
    • Less liquid than they appear
    • Prone to trading at discounts
  • Nadig’s core message: private-market access can be legitimate, but retail investors should be highly skeptical of how it is packaged and why it is being sold to them.