This week, we speak with Fran Kinniry, who is the Global Head of Private Investments at investing giant Vanguard Group. Previously, he was the head of portfolio construction at Vanguard, where for 17 years he worked in the firm’s Investment Strategy Group. Kinniry is behind the drive to bring Private Equity investments to Vanguard’s 401k investors. (Our 2019 interview can be found here)
He explains the biggest challenge confronting retirement savers: low bond yields and high equity valuation have combined to create lower expected returns for the typical 60/40 portfolio. A low return world leads to the idea of adding private equity assets to retirement portfolios.
The option of adding private equity to 401k plans is being managed by Vanguard Institutional Advisory Services. At first, the offerings will only be available to pensions, endowments, and foundations. Target date funds may also be part of the first group, as well as outsourced chief investment officer (OCIO). The second phase will be for Accredited Investors, then Qualified people working with advisors and RIA. The plan is to eventually expand the full suite of products for all clients.
He explains why Vanguard chose HarbourVest as their PE partner: It was a combination of their culture, service, fee structure, and long-term track record.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Joan Solotar, who is Blackstone’s Global Head of Private Wealth Solutions. PWS manages over 100 billion dollars of the private equity giant’s $684 billion in assets. She has been named to Barron’s 100 Most Influential Women in US Finance list.
Fran Kinniry Favorite Books
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb
Antifragile: Things That Gain from Disorder by Nassim Nicholas Taleb
The Undoing Project: A Friendship That Changed Our Minds by Michael Lewis
Judgment Under Uncertainty: Heuristics and Biases by Daniel Kahneman, Paul Slovic, and Amos Tversky