# Private Market Risks and Fee Cuts

**Podcast:** WSJ What’s News
**Published:** 2026-02-02

## Transcript

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Another government shutdown means there won't be a jobs report this Friday.
Plus, a pension fund's $86 million loss on a coffee farm shows the risks of investing in private markets.
And the commitments that institutional investors make when they sign on for these types of ventures don't often give them a ton of recourse when things go poorly.
And if you've been looking to buy a home, the market might be finally swinging in your favor.
It's Monday, February 2nd.
I'm Alex Ossola for the Wall Street Journal.
This is the PM edition of What's News?
The top headlines and business stories that move the world today.
Statistics, or BLS.
House Democrats are pushing for changes on immigration enforcement.
That's stalled a package of bills that includes money for the BLS.
WSJ economics reporter Matt Grossman says a delayed report isn't great news for investors.
It seems likely that the shutdown might not last quite as long, but until they actually get that vote done, or just in a holding pattern again.
In normal times, investors rely on data from the BLS every week and every month to get a sense of what's happening in the economy.
The private sector produces some reports that cover parts of the same information and let you piece together a picture of what's happening out there, but none of it is as comprehensive as what the government produces.
And so when you're not getting these reports, you are trying to piece together a puzzle that's always going to be a bit incomplete.
The report will be rescheduled when funding resumes.
Meanwhile, we're exclusively reporting that a U.S.
intelligence official has alleged wrongdoing by director of national intelligence, Tulsi Gabbard.
The whistleblower complaint is so highly classified that it has sparked months of wrangling over how to share it with Congress.
Since it was filed last May, the complaint has prompted a behind-the-scenes struggle about how to assess and handle it.
For example, the complaint is said to be locked in a safe, and one official said that disclosure of its contents could damage national security.
The whistleblower's lawyer has accused Gabbard of stonewalling the complaint.
Gabbard's office rejects that characterization and has dismissed the complaint as quote, baseless and politically motivated.
A representative for the intelligence community's inspector general said the office had determined specific allegations against Gabbard weren't credible.
And we have three more updates from Washington.
The president said today that the U.S.
has agreed to cut tariffs on India to 18% from 50%, and that India has agreed to stop buying Russian oil.
A deal between the US and India would end a months-long saga of trade negotiations and tariffs that strain the relationship between the two.
For comment.
In Europe, Elon Musk said his satellite internet service Starlink had stopped unauthorized use by Russian drones after Ukraine asked for help.
Starlink, the backbone of Ukraine's military communications, wasn't activated in Russia, but a black market for user terminals had sprung up.
On the rest of the show, low-cost investing pioneer Vanguard cuts its fees again, and shares in Disney fall after the company reports earnings.
That's after the break.
Individual projects like these are an increasingly popular investing strategy.
But Heather Gillers, who covers pensions for the journal, says what happened to the Michigan fund highlights the risks of private markets.
Heather, why are big institutional investors like pension funds investing in individual projects like a single coffee farm?
So you've seen really over the past 20 years, public pensions move further and further into private markets.
And by that I mean private equity.
More recently, real assets.
A coffee farm would be considered a real asset, private credit.
And these are all more illiquid, less transparent types of investments that are not publicly traded.
So as of the 2024 fiscal year, US state and local pension funds have invested about 1.3 trillion dollars in private equity and other private assets, according to data from Boston College.
And that's a huge increase up from around 200 billion in 2005.
And this is just a much more sort of varsity level wild west type of investing than public markets.
And these more direct investments, like this coffee farm, the biggest draw is lower fees.
So when you have a big private equity manager gathering up money from various institutional investors and then investing that money in different projects, they're doing a lot of work there and they're charging a lot of money.
And the appeal of investing in one project or any kind of sort of more direct investment than a traditional co-mingled fund is that you don't have to pay as much overhead, and that means more returns for you.
We've talked on the show about some risks of private markets compared with public market investments, which you mentioned earlier.
How did that apply in this case?
In these cases, the money was locked up for nine years in the case of the coffee farm project.
And if that was happening with a publicly traded investment, like you would realize much, much sooner, just because of the disclosure requirements, that something was going poorly.
So it's much harder to know if things are going wrong.
Both the coffee farm and renewable fuels projects are good examples of how badly that can go.
The pension fund is suing the manager with whom they invested in the renewable fuels venture.
So they are seeking some recourse in the courts there, and time will tell if they'll get it.
That was WSJ reporter Heather Gillers.
Thanks, Heather.
Sure.
The major indexes gained today, led by the 1.1% climb in the Dow.
Commodities continued a wild ride with silver prices that swung in a range of more than 20 percentage points.
Prices for both silver and gold finished down 1.9%.
And oil dropped, with Brent crude down 4.4% on hopes of a de escalation between the US and Iran.
Vanguard said today that it would cut fees on a quarter of its U.S.
funds, bringing Vanguard's average expense ratio across all funds to 0.06%.
That means that for a $1,000 investment, the fee would be 60 cents per year.
Today's cuts follow Vanguard's largest ever round of fee cuts last year.
The company said that the two moves together will save clients a combined $600 million.
We're exclusively reporting that SIBO is in discussions with retail brokerages to relaunch all or nothing options contracts that would compete with prediction markets like Calci and Polymarket.
SIBO once had binary call options, but delisted them when they failed to gain traction.
Today, investors have gotten more comfortable with riskier trades and bets like predicting the outcome of the Super Bowl.
And turning to housing, though many would-be buyers are sidelined from a housing market where sales are stuck at a 30-year low.
Buyers that are getting into the mix are finding bargains.
Last year, about 62% of buyers purchased a home below the original listing price.
A new analysis by the real estate brokerage Redfin found that was the highest proportion since 2019.
Reporter Nicole Friedman says the slumping market is benefiting some buyers.
We have a big increase in mortgage rates and home prices are very high.
It's really pushed a lot of potential buyers out of the market.
So there's just fewer buyers in the market to compete for homes.
And so for the buyers who are left who can afford homes, they have a lot more leverage.
The homes that are selling are the homes where the sellers are willing to negotiate.
And the homes where sellers are being stubborn about their price are sitting longer on the market and not selling.
And so for the spring, I think the big question is how much are sellers going to be flexible, maybe be willing to cut their prices or offer other concessions or incentives to buyers.
Devon Energy has agreed to buy Kotera Energy in a roughly $22 billion all stock deal.
The combined company would be one of the world's largest shale producers and would become one of the dominant players in the Permian Basin of West Texas and New Mexico.
And Disney reported higher profit from streaming in its most recent quarter, but its overall net income fell 6%.
Shares dropped 7.4% today after executives warned that growth in the current quarter would be slower because of higher costs for sports rights, as well as theme park and cruise line expansions.
And a decline in international tourism is weighing on its U.S.
theme parks.
Disney's board of directors is meeting this week and is expected to vote on who will succeed Bob Iger as CEO.
Speaking on today's earnings call, Iger said the company is now in better shape than it was when he took over again three years ago.
And that's what's news for this Monday afternoon.
Today's show is produced by Pierre Biename with supervising producer Tali Arvell.
I'm Alex Osoleff for the Wall Street Journal.
We'll be back with a new show tomorrow morning.
Thanks for listening.