Real estate assets and private investments are more accessible, but the recent Yieldstreet meltdown highlights risks. Four real estate funds resulted in 100% losses for investors, with 20 more on a watchlist. The democratization of private markets brings potential risks as well as opportunities for average investors.

Private credit and alternatives-focused funds have grown in popularity, with asset managers bringing these investments to retail investors through ETFs. State Street’s private credit ETF, PRIV, grew to $145 million from $50 million. Other funds, like VanEck BDC Income ETF (BIZD) and BondBloxx Private Credit CLO ETF (PCMM), have also capitalized on private investments.

Advisors are wary of private credit and alternatives-focused ETFs due to liquidity concerns. Some fear portfolios won’t liquidate evenly over time, especially for pre-retirees. Despite the growth in popularity, challenges remain in constructing optimal portfolios and timing withdrawals for lifetime sustainability.

Exclusive deals in private investments usually remain exclusive, with Main Street potentially getting recycled, less alpha-generating deals. Investors may not be buying these for reduced risk but for the potential alpha they offer. The risks associated with private investments underscore the importance of careful consideration before investing.

Read more at Yahoo Finance: Yieldstreet Losses Highlights the Potential Dangers of Private Investments