Vanguard secures sovereign-scale private equity terms for small investors
Fran Kinniry · Fran Kinniry – The Comfort of Paradox at Vanguard Group (Capital Allocators, EP.173) · Jan 18, 2021 · at 38:33
Fran Kinniry discusses how Vanguard leverages its $6 trillion platform to negotiate institutional fee structures and conditions from private equity managers on behalf of individual investors.
0:00 / 0:23exact quote · 23.8s
720p mp4 · rendered on demand · StarZero watermark
“Very much like they would price a sovereign wealth fund, and so we're able to take our thirty million clients at Vanguard and six trillion dollars, and without saying a word, the price comes in at a very reasonable level that we are now getting terms and conditions what would be a several billion dollar mandate when the end investor is only placing a few million dollars in it.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Fran Kinniry
Long-horizon retail retirement savers need private equity the most
“Let's think about a target retirement fund, 50 year horizon, multi-asset class, single nav, rebalanced with return premiums that could be somewhere two to 400 basis points over public markets. I would argue that those investors are the investors who need priva…”
Fired active managers usually outperform the managers hired to replace them
“When you look at higher fire decisions, there's a number of higher fire decisions out there for active managers, where you fire the incumbent because he has a, you know, significantly bad three, five year return. You hire the new manager based on good past per…”
Vanguard chose private equity over hedge funds and liquid alternatives
“We did a ton of research on liquid alternatives, hedge funds, all the different asset classes. We kept coming back to private equity as an area that we felt was enduring, that could improve our client outcomes”
Vanguard's long-term aspiration is democratizing private equity for retail investors
“If you read the press release that we put out, we're starting in the OCIO. We're starting in the QP on the high net worth side, but our long run aspiration is to democratize this asset class.”
Vanguard private equity will outperform public equity by 200-500 basis points
“We feel confident that this private equity offer will outperform public equity, whether it's two, three, four, 500 basis points.”
Vanguard's active franchise outperformed nearly 90% of peers over 35 years
“And we've been really doing a good job over the last 35 plus years of evaluating and doing due diligence on these managers, which has resulted in Vanguard, its active franchise has outperformed close to 90% of our peers on the active side.”