Big Swing: WVB (Wellington Vanguard Blackstone) All Markets

OK, I don’t really like writing this about my concerns with the Vanguard Group and Wellington Management, but with both firms teaming up with private equity behemoth Blackstone, I have plenty of concerns:

• Your Survival Guy: IRAs and 401(k) Being Targeted
• Blackstone Squeezes Itself into Another Industry
• Beware the ‘Democratization’ of Investing
• Complex, Costly, Often Illiquid, and Uncertain
• Private Equity Is the Next Big Thing Coming for YOU

At Vanguard, you have BlackRock alum Salim Ramji running the ship, and at Wellington Management, you have a fairly new leader in Jean Hynes. “After winning the CEO job in 2021,” writes Forbes, “Hynes got some advice from health care chiefs she knew. Merck’s Ken Frazier (now retired) told her that of all the decisions he made daily as CEO, only four really mattered. The lesson: Get the big swings right.”

Really? Get the big swings right? Is that how you want your money to be thought of as a big swing? What if she swings and misses? And what if she hits a home run? Who wins? The investor paying higher fees gobbled up by private equities’ high costs? Plenty of questions will be answered in the months and years ahead. But what does this mean for investors in Vanguard’s Wellington and Wellesley funds that are run by Wellington Management?

Wellington Management has been around forever, running the Wellington Balanced fund since 1929. Jack Bogle worked there for 23 years before starting The Vanguard Group in 1975, the consequence of a boardroom fight, his firing, and an agreement that Wellington Management would run the investment management side of the business, and he would run the distribution side.

This from Forbes: “Bogle told Forbes in 2017 that he launched low-cost index funds and direct-to-consumer sales in part because it allowed him to do an end run around Wellington by claiming there was no money management or distribution involved.”

Fast forward, and today you have a BlackRock alum running Vanguard, Hynes at Wellington Management, and both making a big swing teaming up with Blackstone by offering the WVB All Markets Fund, “a closed-end ‘interval fund’—meaning it will offer quarterly redemptions to investors for liquidity and could be the centerpiece of a diversified portfolio. Public stocks (from Vanguard funds and direct Wellington investments) will be 40% to 60% of assets; bonds (through actively managed Vanguard funds) will be 15% to 30%; and private Blackstone funds will make up 25% to 40%. Wellington will determine exactly how assets are allocated,” writes Forbes.

Action Line: What are the chances management determines that they like higher fees and can stuff existing balanced funds like the Wellington and Wellesley funds with private equity? Stay tuned and spread the word. When you want to talk about a balanced investing approach, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.

Originally posted on Your Survival Guy.