Folks buying into a private lending fund are learning, I trust, a valuable lesson, and the rest of us should take that lesson to heart, also. This is especially the case when the fund restricts withdrawals. The fund singled out by The Wall Street Journal for its example is Cliffwater Corporate Lending Fund.

Investors are fleeing the $42 billion Cliffwater Corporate Lending Fund, among the latest of its kind to limit redemptions for shareholders. Many investors appear to believe the private-credit fund’s official net asset value is inflated, prompting them to sell their shares, or try to.
One reason many are rushing for the exits: it can be difficult for shareholders to understand what they own. The disclosures at funds like this often are as impenetrable as they are voluminous.

If the claims are not independently verifiable, including by a potential investor, they are not reliable, and a potential investor should not invest.

This, though, is not an excuse for Government to step in and “regulate.” Caveat emptor; investors, like any other American, ought to face the consequences—good or bad—of their decisions on their own, without government taking tastes from successes or doing bailouts for failures.