22 May 2026

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

1Frameworks

9Insights

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Public-Private Wrapper Due-Diligence Test

Test seller motives, liquidity, fees, and valuations before buying private access

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Hot Take· 2

Hot Take01:37

Private Investing Uses Old Wrappers in More Aggressive Ways

Nadig says the legal boundary between public and private investing has not fundamentally changed. Product issuers are instead stretching long-established structures and marketing more aggressive versions as suitable for retail investors.

The governing rules have not broadly opened private markets to everyone
Issuer appetite has changed more than the legal wrappers
Retail suitability claims are becoming more aggressive

“I think the rules haven't really changed. I think that's important to point out here.”
Dave Nadig · 01:37

“What there are are new ways of stretching the edges of rappers that have been around for you know, almost one hundred years at this…”
Dave Nadig · 01:58

#fund wrappers#private markets#retail investors

Hot Take22:36

A High-Profile Fund Failure Could Reset Retail Expectations

Nadig expects private-equity or private-credit failures to expose the weaknesses of public-private hybrids within a few years. He does not predict an immediate systemic crisis or imminent 401(k) adoption, but believes visible losses could make investors more skeptical before retail participation expands further.

Some high-profile private funds may close or unwind
Private credit losses remain one possible trigger
Broad 401(k) adoption is not expected immediately
Visible failures could improve investor skepticism

“I think we're going to have a few funds really have to to, you know, either close, whether it's a high profile private equity fund…”
Dave Nadig · 23:08

“I think we'll have some high profile blow ups, but I think that they will be they'll be good for investors in the sense that…”
Dave Nadig · 23:51

#private funds#fund failures#retail skepticism#401k

Explainer· 4

Explainer04:45

How a Traditional Private-Equity Pool Produces Returns

A limited partnership gathers capital from wealthy investors and institutions, then spreads it across a portfolio of private companies. The model depends on a small number of large winners eventually being acquired or going public and returning cash to the partnership's investors.

Capital commonly enters through an LLC or limited partnership
A pool may invest across roughly fifteen startups
Large exits are expected to carry the portfolio
Acquisitions and IPOs turn private holdings into distributions

“There's some pool of assets, generally it's an LLC or a limited partnership, and it collects a billion dollars of money from a bunch of…”
Dave Nadig · 05:00

“the idea is that one of those hits big, and then the payout from that is either that company gets bought or it goes IPO”
Dave Nadig · 05:24

#private equity#limited partnerships#venture capital#exits

Explainer06:31

Closed-End Fund Variants Differ Mainly in How Money Gets Out

Closed-end funds raise a fixed pool in an initial subscription, after which the governing terms determine whether investors can recover capital. Traded funds provide a secondary-market bid, while non-traded, interval, and tender-offer variants can sharply restrict or eliminate routine exits.

A closed-end fund usually raises its pool once
Traded shares can be sold only when another buyer exists
Non-traded versions may provide no exchange market
Interval and tender mechanisms offer limited periodic liquidity

“The biggest difference is a closed end fund is basically subscribed to once.”
Dave Nadig · 06:48

“Now, that is a closed pool of money, and whether or not money ever comes out of that pool, again depends on how the rules…”
Dave Nadig · 06:58

#closed-end funds#interval funds#liquidity#fund structures

Explainer09:39

Why Closed-End Funds Can Trade at Persistent Discounts

A closed-end fund can trade below net asset value because investors cannot redeem shares directly for the underlying portfolio. The manager still controls permanent capital and is often paid on NAV, so the investor bears the discount while the issuer has little economic need to close it.

Secondary-market liquidity does not guarantee a price near NAV
The issuer benefits from permanent capital
Management fees can continue to be calculated on NAV
Activists may pressure managers to repurchase shares or liquidate

“The discount comes because of what you just said. There's no liquidity in there. There's no way to ever extract real value from the fund.”
Dave Nadig · 09:39

“So if it trades the discount, that manager really doesn't care. They're still getting paid based on NAV.”
Dave Nadig · 09:58

#closed-end funds#nav discounts#manager incentives#activism

Explainer14:03

How ETFs Put Private Assets Inside a Liquid Wrapper

Mutual funds and ETFs can use an allowed fifteen-percent illiquid bucket to hold stakes in private companies. The approach creates a mismatch if redemptions surge, because the public vehicle must meet withdrawals while part of its portfolio cannot readily be sold.

Funds can use up to fifteen percent for illiquid holdings
Some vehicles use the bucket for SpaceX exposure
The rest of the vehicle remains publicly tradable
Large redemptions can expose the liquidity mismatch

“you can take an ETF and use the fifteen percent liquid bucket that all mutual funds are technically allowed to have, and you can try…”
Dave Nadig · 14:03

“You don't want to go too down, too far down that road, and then have a giant pile of redemptions you can't meet.”
Dave Nadig · 14:29

#etfs#private assets#spacex#redemptions

Takeaway· 3

Takeaway10:44

Closed-End Funds Often Solve the Issuer's Problem

Nadig identifies two reasons managers genuinely need closed-end structures: the portfolio contains assets that cannot be sold quickly, or the strategy requires leverage and trading flexibility unavailable in ordinary mutual funds and ETFs. He cautions that these are usually the manager's implementation problems rather than needs shared by a normal investor.

Illiquid private holdings require a closed liquidity gate
Levered long-short strategies may need the structure
Traditional mutual funds and ETFs impose tighter constraints
Structural utility for the manager does not ensure investor utility

“One is they're buying stuff they literally can't sell.”
Dave Nadig · 10:57

“So it does solve a problem. The issue is it's very rarely a problem the normal investor has.”
Dave Nadig · 11:41

#closed-end funds#leverage#illiquid assets#investor fit

Takeaway17:29

The Upside Case Is Concentrated Skill or Exclusive Deal Flow

The credible appeal of these products is not their wrapper but the possibility of differentiated manager skill or early access. Investors may back Ackman's concentrated portfolio judgment or AngelList's Silicon Valley deal flow in the hope that a rare winner produces outsized returns, but Nadig treats that outcome as possible rather than assured.

Concentrated portfolios can outperform when the manager is right
Track records can contain both strong and inconsistent years
Private deal flow may provide earlier access to future winners
The upside depends on genuine skill or access rather than packaging

“If he gets those dozen stocks right, he could absolutely blow away the market.”
Dave Nadig · 17:39

“They're getting to see all of this deal flow from Silicon Valley way before everybody else.”
Dave Nadig · 18:17

#manager skill#deal flow#concentration#venture capital

Takeaway19:04

Private Investing's Payoff Is Concentrated in the Best Funds

Ritholtz argues that median private funds do not compensate investors for higher costs and illiquidity relative to the S&P 500. The attractive outcome appears in top-decile or at least top-quartile funds, making access to superior managers central to the proposition.

Median-fund performance is described as merely adequate
Costs and illiquidity weaken the comparison with public equities
Top-decile funds can outperform and diversify
The investment case depends on reaching top-tier managers

“The median fund it does okay, doesn't do great. You're better off in the S and P.”
Barry Ritholtz · 19:04

“The problem is unless you get into that I'll be generous and say top quartile fund the performance the juice isn't worth the squeeze.”
Barry Ritholtz · 19:27

#fund performance#manager access#private investing#benchmarks