Monte Tarbox, chief investment officer of New York City's roughly $326 billion pension system, told an industry conference that fund expenses charged to investors have been creeping up and that retail private equity products carry a liquidity mismatch. Blackstone reports results on Thursday, Apollo on Nov. 3 and KKR on Nov. 9.
The institutions that built private equity are starting to say in public what the industry's retail push is costing them.
Monte Tarbox, the chief investment officer of the New York City Retirement Systems, which manage about $326 billion, told the Financial Times' Future of Asset Management North America conference in Boston, the FT reported, that the expenses private equity funds charge their investors have been creeping higher. He said a private equity firm, which he did not name, last week asked the pension system to pay for its employees' private jet travel.
Tarbox linked worsening terms for institutional investors to managers' pursuit of money from individual investors, and warned that private equity products sold to retail investors carry a mismatch between the liquidity they promise and the assets they hold, which he said could lead to a crisis.
Why it matters now
Large public pensions are among the largest investors in private equity funds. When one of them says publicly that terms are deteriorating, it signals friction in the relationship that has funded the industry for decades.
The timing is pointed. Blackstone reports third-quarter results on Thursday, Oct. 22, with Apollo on Nov. 3 and KKR on Nov. 9. All three have made individual investors a central part of their growth plans, through evergreen funds that take in money continuously and allow periodic withdrawals. Wealth platforms are still adding those products: Merrill added five evergreen private-market funds to its platform in the third quarter, Citywire reported.
The two complaints
The first complaint is about cost. Fund expenses are charges passed to investors in addition to management fees and the manager's share of profits. When they creep up, net returns fall even if the underlying investments perform. New York City's pension funds reported a 7.2% one-year net return on private equity for fiscal 2026, according to the city comptroller.
The second is about structure. Evergreen funds promise investors the ability to withdraw money periodically, while the companies they own cannot be sold quickly. If many investors ask for money back at once, managers can limit withdrawals, which protects the fund but leaves investors waiting. Tarbox is not the first New York City pension official to raise the issue: his predecessor, Steven Meier, said last year that he expected retail investing in private markets to end badly.
What was not said
Tarbox did not say the pension system would change its allocation to private equity or end any manager relationship. The remarks were a warning, not a policy action.
Market implications
One reading is that institutional pushback will shape terms. Large pensions have leverage over the managers that rely on their commitments, and public criticism raises the reputational cost of passing more expenses to investors.
A second reading is that managers will keep prioritizing retail money. Individual investors are a growing source of capital, and a few critical pension officials are unlikely to change that strategy on their own.
What to watch
Commentary on fees and retail fundraising in Blackstone's, KKR's and Apollo's results; any policy change from the New York City pension funds; withdrawal requests and limits at evergreen funds; and statements from other large pensions. A large public pension formally renegotiating fund expenses would show the criticism has teeth.