In the months following last year's landmark decision by the Labor Department, mutual fund companies have begun testing products that introduce retail clients to the opaque and illiquid worlds of buyout funds. Brokerage giant Vanguard recently revealed plans to allow qualified investors, which includes individuals with more than $5 million in assets, to purchase stakes this summer in private equity funds through its retail investor division. This comes after Charles Schwab opened up a suite of alternative investment products last year for the brokerage's investment advisers.

Over the past few years, private equity firms have pursued the retail market aggressively, with Blackstone among the cadre of PE mega-funds lobbying the SEC for more access to retail clients. At the same time, these mega-funds have realized that in order to market to retail clients successfully, they will need to likely transform some aspects of how they operate. For firms like KKR and Apollo (both publicly traded), talk on earnings calls is as much about the reliable fees earned from managing vast sums of money, including those coming from financial acquisitions (KKR’s recent purchase of insurer Global Atlantic, and Apollo’s merger with annuity-provider Athene) and credit funds, as it is about buyouts. Alongside this pivot towards more predictability, mega-funds seeking involvement with retail investors recognize the need to be seen as good corporate citizens through increased focus on ESG principles.

These same mega-funds like Apollo, Blackstone, KKR, and Carlyle have all published lengthy commitments to ESG; how they are actively working across their portfolios to improve and report progress towards sustainable and equitable goals. Some observers might see such efforts as a wise risk-mitigation strategy, others might subject them to accusations of “greenwashing”, but these mega-funds recognize the shift in consumer behavior – and if they want to capture the attention and wallets of mom-and-pop investors, then they see that a firm commitment to ESG principles as a clear route to success.