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

The line between public and private markets is dissolving as institutional investors increasingly package private assets—like venture capital stakes and private credit—into publicly traded vehicles such as closed-end funds, interval funds, and ETFs. Dave Nottig, president of ETF.com, warns that these 'liquid alts' are not truly liquid and often trade at deep discounts to their net asset value, creating a dangerous illusion of accessibility. He argues that the real motive behind these products isn't democratization, but rather institutional investors using retail investors as an exit strategy during bull markets. The lack of transparency, inflated fees, and reliance on quarterly markups for illiquid assets—like SpaceX or private startups—make these funds risky and opaque. Nottig predicts a reckoning is coming, likely in the form of a high-profile fund failure that will expose the fragility of this hybrid model. Until then, he urges investors to treat these products with extreme skepticism, echoing Groucho Marx: 'I don’t want to be a member of any club that would have me.' The episode reveals how the 40 Act’s outdated structures—like closed-end funds and non-traded vehicles—are being weaponized to sell private investments to retail investors under the guise of liquidity. Even funds like Pershing Square’s PSUS, which trades on the NYSE, are priced at 20% discounts, signaling a lack of confidence.