Vanguard and Blackstone stand at opposite ends of the asset-management spectrum. Vanguard champions low-cost, predominantly passive strategies in public markets, while Blackstone leads in private-market investing, offering access to less liquid, often less transparent opportunities that come with the potential for higher returns, albeit at a much steeper cost than Vanguard’s razor-thin fees.
But as the poets say, opposites attract. As asset managers look to make private-market investing more accessible to investors through vehicles like interval funds, model portfolios, and even exchange-traded funds, these two seemingly incompatible firms have found common ground. Together with Wellington Management, they’ve formed a strategic alliance to deliver public- and private-market exposures in a single vehicle. And they’re not alone: Other traditionally public-focused managers are also partnering up to blend public and private assets.
The Alliance Makes Its First Move
On May 7, Wellington Management filed with the Securities and Exchange Commission to launch the first public/private-markets product from its alliance with Vanguard and Blackstone: the WVB All Markets Fund. According to the filing, the fund will allocate 25% to 40% to private markets, with the rest invested in public stocks and bonds. Wellington will oversee the asset allocation, and we expect Vanguard and Blackstone to provide access to public and private markets, respectively.
The fund will be structured as an interval fund, a vehicle growing in popularity for accessing private markets. Similar to mutual funds and ETFs, an interval fund’s shares can be bought daily. But unlike mutual funds and ETFs, these funds don’t offer daily redemptions. Instead, investors can redeem shares on a set schedule, typically quarterly, as is the case with the WVB All Markets Fund. This predictable and limited redemption window gives managers more flexibility to invest in illiquid assets without having to worry about meeting daily outflows.
Interval funds can also come with fewer investor restrictions than typical private-market vehicles. For example, the WVB All Markets Fund doesn’t require investors to meet income or net worth thresholds. However, interval funds are typically distributed through financial advisors and aren’t available for direct purchase in brokerage accounts.
Who Is Teaming Up With Whom?
The planned WVB All Markets Fund is just the latest example in a growing wave of public/private partnerships. In April, Capital Group launched a pair of interval funds focused on public and private credit in collaboration with KKR. Earlier this year, State Street introduced the SPDR SSGA IG Public & Private Credit ETF PRIV. It also announced a new target-date strategy that will allocate 10% to a private-markets fund from Apollo across the glide path.
The Benefits of Team-Ups
For public-market asset managers, partnering with private-markets specialists, rather than acquiring them or building in-house capabilities, offers several advantages. First, it‘s faster: Partnerships can be negotiated quickly and come with built-in implied credibility. They’re also typically less expensive upfront and help preserve a firm’s culture and identity. Add potential broader distribution benefits from both sides, and the appeal grows stronger. And if things don’t work out, partnerships are easier to unwind than acquisitions.
Is a Partnership Greater Than the Sum of Its Parts?
The biggest question for investors is whether these high-profile partnerships deserve a place in their portfolios. Despite the brand-name pedigree of the asset managers involved, most of these strategies are untested. Some have only recently launched; others, like the WVB All Markets Fund, won’t debut until late 2025. Even the partnerships themselves are new. Their promise of seamless collaboration is more aspiration than a proven advantage.
What is known is that private assets bring added complexity, reduced liquidity, and higher fees. Investors must weigh whether the potential benefits of private-market exposure are enough to clear those hurdles.
To support that evaluation, Morningstar has rolled out a new ratings methodology for semiliquid funds, such as interval funds, and will launch initial ratings in the third quarter of 2025. These forward-looking ratings will evaluate Process, People, Parent, and Price, factoring in not just portfolio construction and fees but also how well these public/private alliances function. After all, it‘s one thing to team up. It‘s another to deliver.