Private-Equity Wants a Piece of Your 401(k)

Comments

• WABAC

  March 7

  Just look at what private equity has done for the health care industry.
• rforno

  March 7

  Hard-pass.
  
  But they can't resist getting their grubby paws on the trillions in pensions/retirement accounts...
• BaluBalu

  March 7 edited March 7

  There is greed and then there is fear (fear of not having enough for retirement) and both seem to motivate people to take similar risks.
  
  You know how defined benefit plans were phased out by companies (encouraging employees to get into 401(k) which helped the stock market) and now the last DB plan like is social security. If private equity and private credit wants to gain more market share, they really need to work on the US government phasing out social security, which should really motivate more people to get into private equity and private credit. Pure demand and supply.
  
  I would watch the Bigs (APO, KKR, BX, BLK (new), etc.)' for how and to what extent they bifurcate burdens from benefits using public markets which would give us an indication of the systemic risks they would create while the Fed and US government is focused on the last war culprits (banks).
• a2z

  March 7 edited March 7

  this has been some time in the making, as institutions have self-capped allocation for a few years now. marketing is no longer restricted to hnw clients.
  
  lobbyists not needed, and will be faster\cheaper by giving trump & cronies their cut directly.
• Observant1

  March 8 edited March 8

  Private equity (PE) investments don't belong within 401(k) plans.
  They are illiquid and difficult to properly value.
  Furthermore, PE is often riskier and considerably more expensive than public markets.
  While some PE funds have generated excellent long-term results,
  there is wide dispersion between best-in-class funds and average funds.
• WABAC

  March 8

  Saw this hilarious sale pitch at CNBC: https://www.cnbc.com/2025/03/08/ultrawealthy-to-retail-investors-expanding-access-to-private-credit.html
  
  Pull quote:

  BondBloxx’s Joanna Gallegos thinks it’s a great idea despite the asset class’ reputation for charging high fees and academic research that have shown sluggish returns. Her firm launched the BondBloxx Private Credit CLO ETF (PCMM) about three months ago.
  
  “We don’t believe in the velvet rope. We believe in connecting markets,” the firm’s co-founder and chief operating officer told CNBC’s “ETF Edge” this week. “People have not had access to it. It makes sense in a portfolio. People should have access to … a power tool like that in their portfolio.”

  Yet another Minsky Moment?
• Observant1

  March 8

  Ms. Gallegos is obviously talking her book!
• Observant1

  March 9

  Cliff Asness discusses the lack of mark-to-market valuations and its implications.
  
  https://www.institutionalinvestor.com/article/2bstqfcskz9o72ospzlds/opinion/why-does-private-equity-get-to-play-make-believe-with-prices
• Sven

  March 9

  Good comment from Asness.

  My criticism has been narrowly focused on PE’s lack of mark-to-market valuations and some of the implications this brings. The illiquidity and nonmarking were once implicitly acknowledged, appropriately, as a bug, but are now clearly sold as a feature. The problem is logically you get paid extra expected return for accepting a bug (possibly explaining some of PE’s historical success), but you pay by giving up expected return for being granted a feature. This is a potential problem going forward.
• yogibearbull

  March 30 edited March 30

  Look, who is getting into private-equity? Vanguard
  (LinkedIn links are open - just close the Login/Signup screen)
  
  https://www.linkedin.com/posts/ericbalchunas_interesting-vanguard-held-discussions-with-activity-7311027525424431104-qiHw?utm_source=social_share_send&utm_medium=android_app&rcm=ACoAAFjCY6wBccxAhzfDGLCwSkfGL97DN413bHU&utm_campaign=copy_link
• Sven

  April 1

  @yogibb, what Vanguard stands to gain in PE? New products with some PE components?
  PE is generally offer to high net worth clients well in excess of $1M.
• Sven

  April 1 edited April 1

  @yogibb, what Vanguard stands to gain in PE? New products with some PE components?
  PE is generally offer to high net worth clients well in excess of $1M. Not sure how it fits in 401(K) plan.
• yogibearbull

  April 1

  Key is the new CEO Salim Ramji.
  
  He came from BlackRock/BLK. Vanguard may want to be a low-cost disruptor in private-equity. Larry Fink/BLK wants to bring private-equity to the masses. Looks to be a dream combo.
  
  Not a sure thing. Remember that at one time, Vanguard wanted to be a low-cost disruptor in the annuities world, but it gave up only after a few years. And a few more years later, it dumped the entire variable-annuity business on Transamerica, retaining only the VA fund management.
  
  Ramji is now in India to review a new tech development center in India although it doesn't offer any funds within India.
  
  Critical for Vanguard will be to improve its customer service and quit the M-F 8-8 support operations. But we haven't seen any announcements for those.
  
  This may not be your grandfather's Vanguard, or even Bogle's Vanguard.
• Observant1

  April 1 edited April 1

  Vanguard already partners with HarbourVest to offer private equity investing for its clients.
  Clients must have $5 million in Vanguard assets, in addition to meeting qualified purchaser
  and accredited investor regulatory standards¹.
  I assume Vanguard seeks a PE strategy accessible to a larger segment of the investor population.
  https://investor.vanguard.com/wealth-management/private-equity
  
  
  ¹ Clients must meet the qualified purchaser and accredited investor standards under federal law,
  typically showing that their net worth is over $1 million or their annual income has been more than
  $200,000 in the last two years.
• yogibearbull

  April 1

  From horse's mouth,
  
  Short 7+min Video
• Observant1

  April 1 edited April 1

  @yogibearbull,
  
  Thanks for the video!
• BaluBalu

  April 1 edited April 1

  Do they already have Private Credit offering, even as an allocation in an existing credit fund? How about equity Investments in start ups like what Fidelity does with some of Fidelity funds?