Amid all the recent hype about the expansion of retail investor access to private funds, critical questions about the suitability of fund products and strategies for such investors, and the potential regulatory consequences for fund managers that opt to work with relatively unsophisticated investors, have gone unaddressed. In the view of some legal experts, much of the discussion about expanding retail access to private funds has considered the issue largely from the point of view of investors – without asking necessary questions about whether and on what terms fund managers should even consider onboarding retail investors in the pursuit of higher assets under management. Proper consideration of the issue should be far more holistic in nature, looking at such issues as investor suitability; liquidity constraints that newly onboarded retail investors will face; fee considerations; the rights of retail investors relative to large institutional investors; and regulatory and reputational concerns. This second article in a two-part series on the so-called “retailization” of private funds offers legal analysis of what expanded retail investor access to the private funds space would mean in practice for investors and managers, and considers the serious challenges such access would entail. The first article discussed the SEC’s mandate to protect retail investors, analyzed the recent reforms and presented experts’ commentary on what those reforms have addressed and failed to address. See “A Look at the State of the Industry on the 75^th Anniversary of the First Hedge Fund’s Launch” (Oct. 24, 2024).