Retail investors are gaining greater exposure to private equity, private credit, private real estate, infrastructure, and other less-liquid assets through retirement funds, wealth platforms, and publicly offered investment vehicles.

As policymakers debate wider access, they should also ask a less visible question: Who governs the valuations on which retail investors rely?

Economically similar private assets can reach investors through different legal structures, each governed by different rules. SEC Rule 2a-5, for example, establishes detailed valuation requirements for registered investment companies and business development companies. Other retail vehicles, including public non-listed real estate investment trusts and collective investment trusts used in retirement plans, operate under different legal and governance frameworks. Public non-listed REITs provide the example examined here.

The legal structure therefore helps determine which valuation safeguards apply, even though the investor’s exposure depends on what the valuation actually does. When net asset value determines transaction prices, fees paid to the manager, and reported returns, the strength of its governance should reflect those economic consequences, not only the product’s legal classification.

Why Valuation Governance Matters

Private assets often lack a continuously observable market price. Their valuation may depend on forecasts, discount rates, comparable transactions, appraisals, and professional judgment.

Managers are central to this process because they possess detailed information about the assets. But they may also have a financial interest in the resulting value. The governance task is to preserve the manager’s information while ensuring that the way it is converted into value can be independently tested and challenged.

This matters, particularly when retail exposure is indirect. A worker may select a diversified retirement fund without separately choosing or examining its private-market holdings and must instead rely on the fiduciaries, managers, and controls governing the products underneath it.

Recent regulatory developments address valuation at different points in the investment chain. In March 2026, the U.S. Department of Labor included valuation among the factors that retirement-plan fiduciaries should consider when selecting investment options. That proposal addresses the fiduciary’s decision to include a product in a plan.

The same month, the SEC held a roundtable on private-market valuation as retail access expands. Its agenda focused more directly on valuation practices and governance inside publicly offered products, including Rule 2a-5. The two developments are complementary: Product selection depends partly on the quality of the valuation controls inside the product.

Rule 2a-5 Provides a Benchmark

Rule 2a-5 applies to registered investment companies and business development companies. It permits a fund board to designate an investment adviser, or certain officers of an internally managed fund, to perform fair-value determinations.

The process remains subject to requirements covering valuation risks and methods, pricing services, board oversight and reporting, internal responsibilities, and recordkeeping. The rule therefore allows manager-led valuation within a defined system of controls.

But Rule 2a-5 does not govern every vehicle through which retail investors may obtain private-market exposure. Public non-listed REITs fall outside that particular framework. They may have board-approved valuation policies, independent appraisers, external valuation advisers, and extensive disclosure, but their processes are governed through a different mix of legal requirements and company-specific arrangements.

Recent filings by FS Credit REIT and BREIT state that their NAV methodologies are not prescribed by a single rule and may differ across products.

The distinction is not between governed and ungoverned valuation. It lies in the source, content, and minimum requirements of the applicable framework. The policy question is whether those differences reflect genuine differences between products or arise mainly from legal classification.

What BREIT Shows

Blackstone Real Estate Income Trust, or BREIT, illustrates the distinction. BREIT is a publicly offered, non-listed, perpetual-life REIT investing mainly in private real estate. It is not a registered investment company subject to Rule 2a-5.

Its shares do not trade on a national securities exchange. Subscription and repurchase prices are generally based on monthly NAV. NAV also affects reported total returns and the fees paid to the manager. It therefore helps determine what investors pay when they enter, what they receive when they leave, how performance is reported, and how much the manager earns.

BREIT has substantial valuation safeguards. Its board approves its valuation guidelines, its properties are appraised annually by third-party firms, and an independent valuation adviser reviews specified asset valuations.

Responsibility for overall NAV nevertheless remains with BREIT’s affiliated investment adviser, which manages the vehicle. For simplicity, this post refers to it as the manager. The manager is ultimately responsible for determining NAV, while the independent valuation adviser reviews specified asset valuations rather than calculating the company’s overall NAV. The review also relies partly on information supplied by the manager that is not independently verified.

BREIT expressly discloses the resulting conflict: The manager is ultimately responsible for determining NAV, while the fees paid to the manager are based in part on that same NAV. The conflict is therefore structural. The party responsible for the valuation also has a financial interest in the result.

That does not establish that BREIT’s valuations are unreliable. It explains why the independence, authority, and access to information of those reviewing the manager’s judgments matter.

BREIT therefore illustrates the central point. A major retail product can combine manager-led valuation with substantial safeguards while operating outside Rule 2a-5. The relevant question is whether its different framework provides comparably effective oversight when NAV determines investor transaction prices, reported performance, and manager compensation.

Protection Should Follow Economic Function

Regulators generally write rules for legal categories such as registered funds, business development companies, REITs, and retirement products. Retail exposure, however, increasingly crosses those categories. Investors can obtain access to economically similar private assets through products whose valuation processes are governed differently.

Regulators should therefore compare these frameworks by economic function as well as legal form. Where judgment-based NAV determines transaction prices, fees, or reported returns, the comparison should examine who determines and can challenge the valuation, how the methods are approved and tested, what authority and information independent reviewers possess, and how conflicts or disagreements are resolved.

Different legal structures may provide different but equally effective answers. Where they do, different rules are justified. But where legal classification leaves a comparable valuation conflict subject to materially weaker oversight, targeted protections may be warranted. Depending on the existing framework, these could strengthen independent or board review, methodology testing, access to supporting information, or escalation and reporting procedures.

The objective is not identical regulation. It is consistent protection for economically similar risks. Legal form may justify different rules, but it should not alone determine the protection governing a number that sets investor prices, manager compensation, and reported returns. As private assets move into retail portfolios, the oversight of NAV should reflect the economic power that NAV exercises.

Mustafa Dah is an associate professor of finance and chairperson of the Department of Finance and Accounting at Lebanese American University (LAU).