Blackstone Group LP’s Stephen Schwarzman said his firm is planning a mutual fund-type offering as the world’s biggest alternative-asset manager joins firms from Carlyle Group LP to KKR & Co. in efforts to attract individual investors.
“We have one product that’s going to be coming out, a mutual-fund complex,” Schwarzman, Blackstone’s chief executive officer, said yesterday at the Morgan Stanley Financials Conference in New York. “This is getting slow and steady receptivity. This is more of an everyday-type offering.”
Blackstone, Carlyle and KKR are among firms expanding into areas such as real estate, energy, credit and hedge funds after buyouts became less profitable following the financial crisis and less attractive to public investors due to their volatile earnings. Carlyle, based in Washington, and New York-based KKR both created offerings in the past year to attract individual investors as they seek to capture the retirement assets of workers pushed out of public and corporate pension funds.
Schwarzman, who co-founded New York-based Blackstone in 1985 and led its asset growth to more than $218 billion, said retail investors increasingly understand alternative assets such as private equity, real estate and hedge funds. Advisers are also seeking exposure to alternatives for their clients because the offerings have historically outperformed broader markets, said Schwarzman.
Tom Hill, the head of Blackstone’s hedge fund-of-funds business, said at the firm’s investor day last month that Blackstone was planning to start a mutual fund this year as it seeks to attract money from defined-contribution pension plans.
“If we’re able to get this right, then individual investors with assets that are significantly less than historically invested are going to be able to get access” to alternatives, Hill said at the May 3 meeting in New York.
Private-equity and hedge funds usually cater to institutional investors and wealthy clients willing to commit millions of dollars to their funds, which operate as limited partnerships and lock up investor money for about a decade. Most mutual funds, by contrast, have low minimum investments and offer investors more flexibility in terms of withdrawals.
Peter Rose, a Blackstone spokesman, declined to comment on the mutual fund beyond Schwarzman’s remarks yesterday.