Vanguard Partners Up With HarbourVest

Vanguard is moving into private equity, reflecting strong demand for the asset class and raising the possibility of rising fee pressure in the most profitable sector of the global investment industry. 

Pennsylvania-based Vanguard — the world’s second biggest investment group, with more than $6tn in assets under management — has struck a strategic partnership with HarbourVest, a $68bn private market specialist, to provide qualified investors with access to private equity. 

Vanguard’s late founder Jack Bogle famously detested high-fee funds. Its move into a market dominated by US private equity giants such as Apollo Global Management, Blackstone Group and Carlyle Group marks a departure from the investment group’s traditional approach.

Vanguard plans to launch a private equity fund each year with HarbourVest, which will use the money for buyouts and also invest it in funds run by other private equity firms, said Fran Kinniry, head of private investments at Vanguard. However these are unlikely to include the industry’s largest funds run by the likes of KKR, Carlyle and Blackstone.

“HarbourVest will invest directly in deals but will also partner with general partners in certain areas,” said Mr Kinniry, who declined to comment on fees. ”Access to the best managers in the space is critical. HarborVest has been getting top access and the performance continues to be strong.”

Full Content: Financial Times

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