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Rekenthaler Report

The Cons (and Pros) of Vanguard’s Decision to Offer Private Equity

The timing is suspect, but the concept may eventually make sense.

John Rekenthaler

Strange Days Indeed
I confess to being puzzled by Vanguard’s news that it has partnered with a private equity investment firm, HarbourVest.

Of all possible Vanguard additions, private equity seemed to be about the least likely. Vanguard serves mostly retail clients, with publicly traded securities, in liquid funds that carry very low expense ratios. In contrast, private equity investments are largely institutional, aren’t traded, and are owned by illiquid funds that are notably expensive. The fit, to put the matter gently, is not obvious.

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