Key Takeaways for Fund Managers and Boards
On March 4, 2026, the Securities and Exchange Commission hosted a roundtable examining the growing intersection between private markets and retail investors, with particular focus on valuation practices and governance under Rule 2a-5 of the Investment Company Act.
As private market strategies increasingly migrate into registered vehicles such as interval funds and business development companies, regulators and industry participants are placing greater emphasis on ensuring that valuation processes remain robust, transparent, and well governed.
The Retailization of Private Markets
Historically, private equity, private credit, and other alternative investments were limited to institutional investors and high net worth individuals. However, new product structures like interval funds, tender offer funds, business development companies (BDCs) and semi-liquid registered vehicles are enabling broader participation.
This shift introduces new regulatory and operational considerations, particularly because private assets typically lack the continuous price discovery found in public markets. As a result, valuation processes require significant judgment and oversight.
The SEC emphasized that expanding retail access must be balanced with strong governance and investor protection mechanisms, with valuation playing a critical role in ensuring fairness for investors entering and exiting funds.
Rule 2a-5 and the Modern Valuation Framework
A central theme of the discussion was Rule 2a-5, which established a formal framework for determining fair value in registered investment funds.
Rule 2a-5 codifies several key responsibilities:
Board Oversight
Fund boards are ultimately responsible for valuation, though they may designate the responsibility to the fund’s investment adviser. Even when delegated, boards must maintain oversight and receive reporting on valuation processes.
Policies and Procedures
Funds must maintain clear, written valuation policies tailored to the specific risks of the portfolio and asset classes involved.
Risk Assessment
Valuation programs must include periodic risk assessments addressing issues such as:
- Data availability and reliability
- Asset complexity
- Illiquidity
- Pricing model assumptions
Methodologies
Funds must establish appropriate methodologies for valuing assets and ensure those methods are consistently applied and documented.
Testing and Back-Testing
Funds are expected to periodically compare prior valuations with realized exit prices or transaction data to evaluate the reliability of their valuation methodologies.
Monitoring and Reporting
Valuation programs must include monitoring mechanisms and escalation procedures for:
- Material valuation deviations
- Process failures
- Pricing anomalies
Documentation is essential throughout the process.
Governance Structures Are Increasingly Important
Panelists emphasized that strong governance frameworks are essential when valuing illiquid assets. Many firms now employ valuation committees composed of cross-functional participants, including:
- Investment professionals
- Finance and accounting teams
- Compliance officers
- Risk management personnel
These committees help ensure valuation decisions are supported by multiple perspectives and internal checks rather than relying on a single individual or team.
Independent oversight from auditors, fund administrators, pricing services, and external valuation specialists also plays an important role in validating valuation processes.
Key Valuation Challenges in Private Markets
The roundtable highlighted several challenges associated with valuing private assets, particularly as these investments move into retail-accessible fund structures.
Limited Market Data
Unlike public securities, private investments often lack observable market prices. As a result, valuations frequently rely on inputs such as market multiples from observed comparable transactions and similar publicly traded companies, and discounted cash flow analyses. These approaches require significant professional judgment and careful evaluation of underlying assumptions.
Frequency of Valuation
Private market portfolios have historically been valued on a quarterly basis. However, registered vehicles offering retail access may require more frequent net asset value calculations, such as monthly or even daily valuations. This shift increases the operational demands on valuation processes and requires managers to maintain more robust data collection and monitoring systems.
Liquidity Considerations
Retail-oriented fund structures must balance investor redemption features with the illiquid nature of the underlying assets. Ensuring alignment between asset liquidity and investor expectations is an important consideration when determining fair value and managing portfolio valuations over time.
Technology, Data, and Independent Valuation Oversight
Panelists also discussed the growing role of technology and data analytics in supporting private market valuation processes. Advanced tools can help managers aggregate portfolio information more efficiently, identify pricing anomalies, and enhance reporting to fund boards and regulators.
Despite these advances, technology does not eliminate the need for professional judgment or strong governance. Private asset valuations often depend on assumptions, models, and limited market data, making oversight and disciplined valuation processes essential.
As a result, independent valuation providers continue to play an important role in many funds’ valuation frameworks. Third-party valuation specialists can provide objective valuation analyses, review internal models, and support board oversight while helping to mitigate potential conflicts of interest when advisers value their own holdings.
Engaging independent valuation expertise is widely considered a best practice, particularly as retail participation in private markets grows and regulatory expectations around valuation governance continue to evolve.
Implications for Fund Managers and the Future of Private Market Investing
As retail participation in private markets continues to grow, valuation governance is expected to remain a key regulatory focus. The SEC’s roundtable underscored that expanding access to private assets must be accompanied by strong valuation frameworks designed to ensure fairness and transparency for investors.
Managers offering private market exposure through registered vehicles such as interval funds, BDCs, and other semi-liquid structures should ensure their valuation programs include:
- Well-documented valuation methodologies
• Regular testing and back-testing of valuation assumptions
• Robust governance structures and valuation committees
• Independent oversight where appropriate
• Clear reporting and communication with fund boards
Rule 2a-5 has formalized many expectations around valuation oversight, and as private market strategies continue to migrate into retail-accessible products, regulators and market participants are likely to place even greater scrutiny on how valuations are determined, documented, and monitored.
Ultimately, the roundtable reinforced a clear message: as access to private markets expands, valuation governance will remain a critical pillar of investor protection and market integrity. Firms that invest in disciplined valuation processes, strong internal controls, and independent oversight will be better positioned to navigate this evolving landscape while maintaining confidence among investors and regulators.
How Houlihan Capital Supports Fund Valuation Governance
As valuation governance becomes increasingly important under Rule 2a-5, many funds are strengthening their processes by engaging independent third-party valuation specialists with direct experience valuing the asset classes held in their portfolios. Houlihan Capital provides independent valuation services for private investments, complex securities, and fund-held assets, bringing deep experience supporting investment managers, boards, and fund administrators across private equity, private credit, and other alternative investment structures. Our team combines deep industry expertise with rigorous valuation methodologies to help funds strengthen their valuation frameworks and provide stakeholders with greater confidence in reported net asset values.
To learn more about Houlihan Capital’s independent valuation services or to discuss your fund’s valuation needs, contact:
Ryan Martindell
Vice President
rmartindell@houlihancapital.com
