The retailization of the private funds industry is continuing unabated, picking up steam and, at this point, seemingly inevitable. As fund managers clamor for a share of this new capital, institutional investors are raising concerns about the limited understanding among all market participants about how this influx of retail capital – with its own unique traits and incentives – will impact their long-term interests. Certain potential changes are rooted in unique features of retail vehicles, as their periodic redemption offerings create liquidity risks and their evergreen nature produces constant fundraising pressure. Others are based on likely conflicts of interests from fund managers’ parallel management of retail funds and private funds, which could impact how investments are allocated and the ongoing availability of co‑investment opportunities. In an attempt to get ahead of those issues, the Institutional Limited Partners Association (ILPA) recently issued a white paper cataloguing some potential risks of retailization. This second article in a three-part series examines specific concerns about how retailization will affect everything from fund liquidity, governance rights and co‑investment allocations, with supporting insights from the ILPA white paper. The first article delved into the market and regulatory efforts driving retailization, and how that is stoking fears among institutional investors. The third article will explore how the impact of retailization on managers’ operations will affect institutional investors, as well as protective measures the latter can adopt. See “Inherent Obstacles and Promising Pathways to Retailization in the PE Industry” (May 29, 2025).