Blackstone Group LP, the money-management firm seeking to attract more individual investors, raised almost $1 billion from Fidelity Investments for its mutual fund that will invest in hedge funds, Fidelity said.
Fidelity, based in Boston, is offering the Blackstone Alternative Multi-Manager Fund as part of its Portfolio Advisory Service, which manages money on behalf of wealthy clients. Blackstone has an exclusive agreement with Fidelity for an undisclosed period covering individual investors, and can offer the fund of funds to its institutional clients, according to a person briefed on the deal, who asked not to be identified because the information is private.
Blackstone, based in New York, joins peers Carlyle Group LP and KKR & Co. in starting offerings that can be marketed to individuals as the leveraged-buyout industry seeks to broaden its client base. The firm, which oversaw $229.6 billion in assets as of the end of the second quarter, said in June it was planning a mutual fund aimed at smaller investors.
“In the three years we have been planning for this product launch, we have built a very solid relationship with Fidelity,” Tom Hill, chief executive officer of Blackstone Alternative Asset Management, said today in an e-mailed statement.
“Like Blackstone, Fidelity is a leader in the asset-management industry and has a history of providing great value to its clients,” said Hill, who declined to comment beyond the statement.
The fund has an annual expense ratio of 3.25 percent, which includes a management fee of 1.95 percent, according to a filing with the U.S. Securities and Exchange Commission.
Money managers with allocations from Blackstone are Two Sigma Advisers LLC, Cerberus Sub-Advisory I LLC, Credit Suisse Hedging-Griffo Servicos Internacionais SA, HealthCor Management LP, Caspian Capital LP, Boussard & Gavaudan Asset Management LP, Wellington Management Co., Good Hill Partners LP, BTG Pactual Asset Management U.S., Chatham Asset Management LLC and Nephila Capital Ltd., according to a fund filing last month.
Fidelity managed about $104 billion through its portfolio advisory service as of June 30, said Nicole Goodnow, a spokeswoman. Fidelity has discretion over the management of the accounts, which require a minimum investment of $50,000, and the allocation to alternatives is typically 3 percent to 5 percent, she said.
The Blackstone partnership is the second such multistrategy, multimanager alternative mutual fund offered through Fidelity’s managed-account program, which last year started investing in the $989 million Arden Alternative Strategies Fund.
The Fidelity program charges clients an annual advisory fee ranging from 0.25 percent to 1.7 percent of “eligible assets invested,” according to the firm’s website.