Retail Alternative Investment Products: Gearing Up for New Allocations

August 4, 2026

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Until recently, alternative investments were almost exclusively the province of institutional investors.

That is about to change in a big way, predicted Joshua Deringer of Faegre Drinker Biddle & Reath at the Investment Adviser Association’s 2026 Investment Adviser Compliance Conference, held in Washington, D.C., in March. Deringer moderated a session titled “Retail Alternative Investment Products: Gearing Up for New Allocations,” featuring panelists Sarah Bessin of Franklin Templeton, Josh Levit of Invesco, and Victor Siclari of Great Gray Trust Company.

Alternative investment products designed for retail investors have existed for some time, but there has been a “rapid acceleration over the last two years as popularity has grown,” Deringer noted. The expansion partly reflects increased supply from private credit borrowers seeking funding outside traditional channels.

Increased demand has also fueled growth. Retail investors increasingly recognize the “advantage and appeal” of alternatives, Siclari said. While mainstream fixed-income investments now tend to move in sync with equities, alternatives remain “generally noncorrelated” with stocks and therefore continue to provide diversification.

Traditional defined benefit plans have used alternatives “for years and years,” Siclari mentioned, and currently allocate 16% of their assets to private investments. Without access to the private markets, retail retirement investors are “missing out on opportunities” to invest in assets with potentially higher returns, he suggested.

Meanwhile, the current administration in Washington has expressed strong interest in “democratizing access” to alternative investments by making them more readily available in the retail market. President Trump’s 2025 executive order recognizes retirement plan fiduciaries’ authority to allocate plan assets to alternatives and effectively encourages them to do so. The Department of Labor has carried that theme into its recent proposed rule on fiduciary duty in retirement plans. The IAA’s June 1 comment letter supports the proposal while making recommendations for targeted improvements.

The SEC has also prioritized expanding retail access to alternatives, both inside and outside retirement plans, Bessin added. Potential initiatives include giving registered funds greater flexibility to invest in alternatives and making private investments more accessible to individuals—perhaps by expanding the ways individuals can qualify as “accredited investors” eligible to participate in private offerings.

Designing a retail alternatives offering

For investment advisers considering the retail alternatives market, product design is a key consideration.

The panelists agreed that matching an offering’s structure to the liquidity of its underlying assets is “pretty darn crucial,” as Levit put it. Because tender offer funds and interval funds give investors regular opportunities to redeem shares, for example, their portfolios must be able to generate enough liquidity to meet redemption requests.

The nature of the underlying assets can matter beyond liquidity. Related-party transactions, for example, are not unusual in private equity investing but may not be feasible in registered funds. In general, Bessin noted, “sponsors are still really dependent on SEC relief in order to create structures that are workable.” Requiring each adviser to obtain individual relief makes the process “much slower, more cumbersome, and more expensive,” she added.

Advisers should also understand the regulations governing how intermediaries distribute an offering, Bessin said. FINRA rules, for example, limit the compensation intermediaries may receive, while state law governs the distribution of nontraded business development companies. Intermediaries may also favor offerings with features common to more familiar investment products, such as daily valuations and ticker symbols.

Above all, alternative offerings must be “managed with the investor interest in mind,” Siclari stressed. For many individuals, a retirement account is the ideal place to hold alternative investments because the account’s long-term objective aligns with the long-term nature of alternative investing.

Structures already common in retirement accounts – target-date funds and collective investment trusts (CITs) – are well suited to giving individual investors exposure to alternatives, he said.

Target date funds offer a “one decision” approach to retirement planning by investing across multiple asset classes and adjusting those allocations as investors’ risk profiles and objectives evolve over their lifetimes.

Collective investment trusts are an alternative fund structure available only within employer-sponsored, tax-qualified retirement plans. Although CITs may look much like mutual funds to retirement investors, they are subject to different liquidity requirements and therefore have greater flexibility to invest in private markets.

As a result, Siclari observed, many target date funds – especially those structured as CITs – are beginning to allocate assets to private equity and private credit, giving investors exposure to these growing asset classes within a professionally managed portfolio.

Whatever structure advisers choose for a retail alternatives offering, “partnering is key,” Bessin emphasized. Advisers must pair creativity with appropriate review to design an offering that serves investors well.