European Retail Investors Gain Unprecedented Access to Private Markets — But Beware the Hidden Risks
European regulators just swung open the doors to private markets for everyday investors—but the champagne might be premature.
New rules let retail traders dive into previously exclusive alternative assets. Private equity, venture capital, and real estate funds now sit alongside stocks and ETFs in brokerage accounts across the continent.
The opportunity looks tempting—higher potential returns, portfolio diversification, and a shot at the illiquid investments that made institutions wealthy. But the fine print reveals traps that could wipe out unprepared investors.
Liquidity vanishes when markets tumble. Fees chew through returns. Valuation opacity means you might not know what you own—or what it's really worth.
One cynical City veteran quipped: 'They're not opening doors—they're installing revolving exits for retail money.'
Yes, access democratizes investing. But in private markets, the house always wins—and now more players get to lose.
Retail investors in Europe are gaining unprecedented access to private markets, once reserved for institutions and the wealthy. The latest push, led by Hargreaves Lansdown in the UK, signals both new opportunities and rising concerns. As access broadens, the promise of growth is balanced by the reality of risk.
A New Chapter for Retail Access to Private Markets
Retail investors in Europe are stepping into private markets in ways that were unimaginable a decade ago. This shift is powered by new rules, innovative products, and platforms willing to take bold steps. Hargreaves Lansdown, the UK’s largest DIY investment site, has become the latest mover in this trend. In partnership with Schroders Capital, it now offers access to Long-Term Asset Funds (LTAFs) through self-invested personal pensions and general accounts. For as little as £10,000, investors can gain exposure to global private equity and energy infrastructure, both areas long reserved for institutions. Yet while the MOVE marks a milestone, industry voices stress that the promise of high returns carries equally high risks.
Private Markets Promise Diversification and Growth
The attraction of private markets is clear. They offer exposure to unlisted companies, infrastructure projects, and private credit that are often shielded from the day-to-day swings of public equities. Investors gain the potential for diversification and the chance to tap into long-term growth stories. Emma Wall, head of platform investments at Hargreaves Lansdown, described the launch as a “milestone” that makes these opportunities more accessible. Advocates argue that retail access can also fuel wider economic benefits. Private equity, for instance, helps businesses expand at a time when initial public offerings are sluggish, while private credit channels capital into sectors that need financing for energy transition and industrial revival. These benefits explain why governments and regulators across Europe are encouraging retail participation. France has even legislated to redirect billions from household savings into private investments that support decarbonization.
Risks Lurking Behind the Retail Push into Private Markets
Despite the optimism, experts warn that private markets remain a double-edged sword for retail investors. Liquidity is the most pressing issue. Unlike public stocks, private assets cannot be sold at will. Withdrawal windows often require 90 days’ notice or longer, making funds unsuitable for investors who might need quick access to cash. The Financial Conduct Authority in the UK has emphasized this risk, balancing the goal of democratization with the need for safeguards. Moody’s Ratings has also flagged the possibility of mismatches: in times of stress, retail investors could rush to exit, creating liquidity shortfalls. Moreover, these investments often carry complex fee structures. If illiquidity premia shrink as access widens, returns may fall short of expectations, particularly once high charges are factored in. A lack of standardized disclosure compared with public markets adds another LAYER of opacity that could leave retail investors exposed.
Hargreaves Lansdown as the Latest Example of a Wider Trend
The launch by Hargreaves Lansdown is part of a global surge in retail access to alternative assets. Earlier this year, Apollo and State Street created a private credit ETF, while BlackRock and Partners Group introduced diversified model portfolios spanning private equity, private credit, and real assets. In Europe, the second-wave ELTIF regime has removed barriers that once kept retail investors at bay, paving the way for hundreds of eligible long-term funds. The UK government’s reforms also play a role: starting in 2026, LTAFs will be allowed inside tax-efficient stocks-and-shares ISAs, further expanding their appeal. The Schroders Capital partnership underlines this momentum. One LTAF will focus on small and mid-sized private companies, while another targets global energy infrastructure assets such as solar parks. These are sectors with strong long-term narratives, but they also highlight the need for patience, as investors may have to wait years to see meaningful returns.
Striking a Balance Between Opportunity and Prudence in Private Markets
The big question now is how far retail access should go. Private markets can diversify portfolios and potentially deliver stronger returns, but the risks cannot be ignored. Analysts say investor education must sit at the Core of any expansion. Retail investors need to understand that these are not products for quick wins or daily liquidity. Instead, they require a long-term horizon, tolerance for complexity, and the ability to lock away capital. Industry leaders stress the importance of clear communication and independent analysis to ensure that investors do not overestimate the rewards or underestimate the risks. As Hargreaves Lansdown opens the door wider, Europe stands at a turning point: private markets may help savers grow their wealth and economies fund growth, but only if caution keeps pace with ambition.
