Vanguard connected with Blackstone, Carlyle on potential private market tie-ups

Vanguard Group held discussions with major alternative asset managers in recent months to explore potential tie-ups that would market private assets to individual investors.

The talks with Carlyle Group Inc. and Blackstone Inc. were preliminary, and Vanguard doesn’t yet have plans to collaborate with either firm, according to people familiar with the matter, who asked not to be identified discussing private issues.

The world’s second-largest asset manager, Vanguard is well known for offering low-cost passive funds. Its global head of oversight and manager search, Matt Piro, led the discussions about partnerships that could potentially give Vanguard’s clients access to private markets. 

Vanguard, Blackstone and Carlyle declined to comment. 

Traditional asset managers like Vanguard and BlackRock Inc. have been hunting for ways to give their clients access to potentially lucrative investments such as private credit and equity, which were once mostly available to big institutions and billionaires.

Some such firms have acquired or partnered with alternative asset managers to launch products that promise the benefits of private assets without the high fees and long cash lock-up periods usually associated with those investments.

Capital Group has partnered with private equity pioneer KKR & Co. to debut two funds for wealthy individuals that invest across public and private markets, while State Street Corp.’s asset management arm partnered with Apollo Global Management Inc. to launch the first-ever exchange traded fund to invest in private credit. 

BlackRock — which aims to dominate private markets with the recent acquisitions of Global Infrastructure Partners and credit firm HPS Investment Partners — this week started offering model portfolios that include private assets. 

Malvern, Pennsylvania-based Vanguard oversees $10.4 trillion of assets. It already offers private equity to clients via a strategic partnership with HarbourVest, but the partnership managed just $2.4 billion at year end.

Salim Ramji, Vanguard’s first outsider chief executive officer, took over in July and has said he wants to do more to bring low-cost private assets to retail clients.  

“Low-cost investing applies in index and it applies in active,” he said in an interview in August. Over time, he said, he’d also like low-cost investing to apply to private assets.