By Isla Binnie
NEW YORK (Reuters) -Leading asset manager Blackstone has launched a unit to channel more retirement funds globally into private market investments, a potentially multi-trillion-dollar opportunity in the United States alone, it said on Wednesday.
The sector’s ambitions to tap those savings received a boost in August when U.S. President Trump signed an executive order directing the Labor Secretary and Securities and Exchange Commission to make it easier for everyday savers to invest in alternative assets through popular 401(k) plans.
Alternative assets include private equity, private credit, cryptocurrency and real estate.
The new unit will focus on forming partnerships and creating products for defined contribution plans, Blackstone said in a statement. These are plans employees and employers pay into, but that do not guarantee the saver will get more than they invested when they retire.
The unit will be part of the private wealth business that the company says manages about $280 billion in assets.
Advocates of increased retail investment in private assets say they will give more people access to potentially higher returns, while critics say they carry more risk and come with higher fees than the highly-regulated, publicly traded securities the 401(k) plans have traditionally favored.
“For decades, the world’s biggest and most sophisticated institutional investors benefitted from the strong returns and diversification of investing in private markets,” Blackstone president and Chief Operating Officer Jon Gray said in a statement. He said Blackstone aimed to be “the partner of choice for retirement solution providers”.
Blackstone said Heather von Zuben would head the new unit, moving from a role in charge of open-ended credit funds. Tom Nides, a former U.S. ambassador to Israel and long-time Morgan Stanley banker before joining Blackstone, will be its chair. Paul Quinlan, who previously worked as Chief Financial Officer in Blackstone’s real estate business, has been picked as head of the U.S. part of the business.
Private markets firms, including Apollo and Blue Owl Capital, have struck partnerships with other asset managers to offer funds to the defined contribution market that mingle public and private investments.
Americans held $9.3 trillion in 401(k) plans as of June 30, according to trade association the Investment Company Institute.
(Reporting by Isla Binnie; editing by Barbara Lewis)
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