In a pact designed to break the private-public markets barrier, three of the largest US asset managers revealed plans last week to build institutional-grade multi-asset portfolios for everyday investors.
The news comes amid a private markets goldrush that has seen many investment firms mobilising to meet demand now spilling over from institutions down to retail investors.
Under the first-of-a-kind agreement, Wellington Management, Vanguard and Blackstone will work together to create a range of ‘solutions’ blending “public and private markets as well as active and index strategies”, according to a release.
“With this collaboration, the firms seek to address one of the most important long-term challenges facing investors and the asset and wealth management industry – building fully diversified portfolios that incorporate private assets and pursue higher returns,” the statement says.
The tripartite plan will draw on the active management skills and “sophisticated asset allocation expertise” of the Boston-headquartered Wellington – one of the world’s oldest investment managers – combining with Vanguard’s low-cost index prowess (as well as actively managed fixed income strategies) and the private markets nous of Blackstone.
Collectively, the three managers plan to “develop solutions that can support financial advisors’ efforts to meet their clients’ income and growth goals”, the release says, with launch product details expected later this year.
Jon Gray, Blackstone chief operating officer, said in the release that the firm was “proud to join forces with Wellington and Vanguard, two of the world’s leading asset managers, to further expand the benefits of private markets”.
The private markets trend has been building steam over the last couple of years, in particular, as institutional investors sought diversification away from traditional financial assets.
But while access to the more illiquid private assets has historically been limited to institutions, managers are increasingly looking to broaden private markets product distribution through financial advisers and retail investors.
For example, BlackRock chief, Larry Fink, outlined a move to ‘democratise’ private assets in his annual investor letter last month via a novel indexing strategy.
“With clearer, more timely data, it becomes possible to index private markets just like we do now with the S&P 500,” Fink says. “Once that happens, private markets will be accessible, simple markets. Easy to buy. Easy to track.”
During the last couple of years BlackRock has splashed out almost US$28 billion to buy three key players in the private asset sector: Global Infrastructure Partners for US$12.5 billion; another US$12 billion for private debt specialist, HPS Investment Partners; and, US$3.2 billion for alternative asset data firm, Preqin.