Blackstone, Vanguard, and Wellington Management Partner to Develop Multi-Asset Investment Solutions

Investment giants Wellington Management and Vanguard are partnering with alternatives asset manager Blackstone to develop “simplified multi-asset investment solutions that seamlessly integrate public and private markets as well as active and index strategies,” according to a joint press release.

Through this collaboration, the firms seek to address what they characterize as “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.”

Wellington, Vanguard, and Blackstone now join other traditional asset managers and alternatives groups teaming up to facilitate greater accessibility to alternative investments, such as private markets, among individual investors and their advisors. Earlier this year, for instance, State Street and Apollo Global Management launched the SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV) which invests in private and public credit, among other instruments. BlackRock and Partners Group launched a retail private markets product in September, enabling access to private equity, private credit, and real assets in a single portfolio. In October, Capital Group and KKR filed registration statements with the SEC for two public-private fixed income funds that will provide new ways for individual investors to incorporate private markets into their portfolios.

Innovating is nothing new for these firms, particularly Vanguard, a firm with a long history of disrupting the investing industry by providing access to investors and driving down fees. This joint endeavor also tracks with Vanguard’s previously expressed desire to expand private equity accessibility; in 2021, then-CEO Tim Buckley stated in a press release that “Over time we will expand access to [private equity], which has traditionally been reserved for the wealthiest investors, to the many qualified investors at Vanguard.”

Details about the Wellington-Vanguard-Blackstone solutions are expected to be released in the coming months.

Takeaways

The trend we’re seeing of companies seeking to democratize the market by expanding access to alternative investments is likely being driven by needs both among individual investors and investment alternative investment managers.

For investors, the pool of available investments to choose from has dropped dramatically over the past 30 years. In 1996, there were more than 8,000 publicly listed companies traded on U.S. exchanges. However, in 2023, that number had dropped by more than 50% to around 3,700—not because there are fewer companies than there were 30 years ago, but because companies have increasingly chosen to stay private as they’ve more recently had access to an abundance of private capital that enables greater long term control and flexibility.

With available investment choices shrinking among public markets, alternative investments offer a potential new sector for individuals to invest in. However, alternative investments such as private markets have historically involved high levels of sophistication and required significant expertise to effectively invest in. Additionally, they tend to be less liquid than traditional investment assets and may be mired in SEC regulations, adding further complexity and barriers to entry for individual investors.

That’s where investment vehicle “manufacturers” come in. This need for investment diversification among investors presents an opportunity for these manufacturers (i.e., Wellington, Vanguard, and Blackstone) to expand their market. By developing investment vehicles with built-in risk mitigation (i.e., packaging diversified, unrelated alternative investments), they can theoretically remove some of the complexity, risk, and high minimum required investments historically associated with these types of assets, enabling individual retail investors to access them and possibly achieve higher returns.