Hopefully this is not a repost.
This "exploration" into PE was announced months ago but the decision appears to be formalized now.
Vanguard Group is launching a private-equity fund, a striking move for the money-management giant that built a household brand on the back of low-cost funds for everyday investors.
The new fund is part of Chief Executive Tim Buckley’ s push to broaden the Malvern, Pa.-based company’s appeal as a financial adviser for larger investors. With Mr. Buckley at the helm, the firm with $6.2 trillion in assets under management has pressed beyond the index-fund business it is best known for and further into the advisory business. It has also added more actively managed funds to its financial lineup.
Private-equity funds are typically more opaque and complex than stock and bond funds. They are also more expensive, commanding as much as 2% management fees and a 20% share of profits.
Vanguard has picked the Boston firm HarbourVest Partners to manage the new private-equity fund, said people familiar with the matter. Both firms expect to raise hundreds of millions of dollars for the fund, the people said.
At first, the private-equity fund will only be offered to endowments, foundations and other institutions that have appointed Vanguard as a financial adviser. Vanguard expects to open private equity in the future to wealthy individuals who use its financial-advisory services, the people familiar said.
Vanguard became a behemoth with ultralow-cost strategies and funds mirroring indexes.
As Mr. Buckley takes Vanguard into new areas, the challenge he faces is convincing customers that the firm will stay true to the vision of its founder, Jack Bogle, who advocated keeping investing simple and dirt-cheap for everyday individuals. The index pioneer died a year ago.
“I can’t say it’s for all clients, but we think for many clients, it’s suitable,” Mr. Buckley said when discussing private equity in an interview. He said the entry into private equity doesn’t change what Vanguard has done all along.