The CFA Institute Research and Policy Center has published new research examining how the rapid expansion of private credit into retail investment markets is changing the risks facing investors and the financial system.
The research, Private Credit Funds and the Retail Shift: Structural Vulnerabilities and Policy Responses argues that as private credit becomes more widely available through semi-liquid funds, business development companies, digital platforms, and other retail-oriented vehicles, existing regulatory frameworks have failed to keep pace with the evolution of the market. The research identifies areas where oversight, disclosure, and investor protection need to evolve to better protect investors.
The research finds that retail participation is changing the way structural features of private credit interact with fund design and investor expectations. The report notes that “retail access” is best understood as an expansion of private credit into the upper tiers of private wealth offerings rather than a full democratization of investor access for all.
Structural features such as illiquidity, appraisal-based valuation, concentrated exposures, and increasingly flexible lending documentation become more significant as private credit is distributed through retail investment vehicles. The research concludes that these risks are transformed rather than removed as the market evolves, placing greater emphasis on fund design, valuation, and liquidity management.
Key Recommendations:
- Stronger private credit fund suitability and disclosure requirements for retail investors
- More consistent valuation standards and greater transparency around valuation methodologies, fees, and pricing
- Stronger liquidity risk management and redemption stress testing
- Greater international coordination on supervision and data sharing
- Closer oversight of NAV-based lending and other forms of layered leverage
Olivier Fines, CFA, Head of Advocacy and Policy Research at CFA Institute, said:
“Private credit has become an established part of the capital markets. Its further expansion into wealth segments and platforms, alongside defined contribution pension reforms, brings a wider group of investors into a market typically built around long-term, illiquid assets. That places greater emphasis on fund design, governance, and valuation. Generally, these products are not designed or intended for broad retail distribution without the guidance of an advisor.”
The research also examines the growing use of covenant-lite lending, the implications of valuation practices for retail investors, and the increasing interconnectedness between private credit funds, private equity sponsors, and the banking system. It concludes that stronger disclosure, governance, and regulatory coordination would support continued market development, while helping investors better understand the unique characteristics of private credit investments.
Cheryll-Ann Wilson, PhD, CFA, Senior Affiliate Researcher at CFA Institute and author of the research, adds:
“The report identifies practical areas where policy can evolve alongside the market. Regulators should focus on appropriate product design, including liquidity risk management tools, stress testing and monitoring of exposures. Moreover, advisers should also work to educate clients, supported by transparent disclosures and tools, to facilitate investor comprehension which becomes more urgent as market accessibility widens.”
Private Credit Funds and the Retail Shift: Structural Vulnerabilities and Policy Responses forms part of a continuing series from the CFA Institute Research and Policy Center examining private markets. To download, visit: https://rpc.cfainstitute.org/research/reports/2026/private-credit-funds-and-retail-shift
About the CFA Institute Research and Policy Center
The CFA Institute Research and Policy Center brings together CFA Institute expertise along with a diverse, cross-disciplinary community of experts working collaboratively to address complex problems. Firmly anchored to the CFA Institute tenets of intellectual independence, impartiality, and technical rigor, its research, advocacy and standards work seeks to transform research insights into actions that strengthen markets, advance ethics and improve investor outcomes for the ultimate benefit of society. It is organized around four themes: capital markets, technology, the future of the investment industry, and sustainability.
About CFA Institute
As the global association of investment professionals, CFA Institute sets the standard for professional excellence and credentials. We champion ethical behavior in investment markets and serve as the leading source of learning and research for the investment industry. We believe in fostering an environment where investors’ interests come first, markets function at their best, and economies grow. With more than 200,000 charterholders worldwide across 160 markets, CFA Institute has 8 offices and 157 local societies. Find us at www.cfainstitute.org or follow us on LinkedIn, and subscribe on YouTube.
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