Wall Street private equity giant Blackstone Group (BX) is teaming up with Vanguard Group and Wellington Management to bring more private assets into everyday savers’ portfolios.
The three fund managers said Tuesday they will jointly develop “multi-asset investment solutions” to provide individual investors with access to private and public markets. These hybrid public and private funds will be available to clients through financial advisors.
The group plans to announce more details about the products in the coming months, according to a press release. The Wall Street Journal first reported the alliance on Tuesday.
“Blackstone has been a pioneer in revolutionizing the way individual investors access private markets. This initiative builds on our strong track record of providing institutional-grade investments to individual investors,” Blackstone Chief Operating Officer Jon Gray said in a press release.
Blackstone reports first-quarter results Thursday. Its shares fell Wednesday morning. Blackstone shares have fallen 22% since the beginning of the year amid widespread market turmoil.
Blackstone isn’t the only asset manager looking to bring more products into the portfolios of everyday investors.
Big Wall Street private equity giants like Apollo ( APO ), Partners Group ( LP ) and KKR ( KKR ) are teaming up with asset managers like State Street ( STT ), BlackRock ( BLK ) and Capital Group ( CLG ) to make private funds more accessible to everyday investors.
In fact, BlackRock CEO Larry Fink encouraged everyday investors to expand and diversify into private market assets in his annual management letter.
He said that “the standard portfolio of the future may be more like 50/30/20 — stocks, bonds and private assets such as real estate, infrastructure and private credit” rather than the traditional 60/40 split of stocks and bonds.
The long-term hope of the private asset community is that the Trump administration will make it easier for them to offer private assets such as real estate funds, private loans and corporate leveraged buyouts to retirement savers through 401(k) plans.
Such a move would further spur demand for unlisted, illiquid investments (those not traded on any public exchange). Currently, there are more than $12 trillion in defined contribution plans, which workers rely on to build retirement nest eggs.
The Biden administration is not keen on the idea, but industry observers are more hopeful that a second term for President Trump would open the door to private assets in 401(k) plans, given that his administration has announced broad deregulation of the financial services sector.
The argument in favor of such a change is that private asset funds can give ordinary investors more investment diversification opportunities away from public markets and earn greater returns — but with some illiquidity.
The argument against such a move is that these funds are riskier and less liquid than ordinary index funds, making it difficult to withdraw money if problems arise.
