Vanguard Launches Second Private Equity Fund

Vanguard has launched its second private equity fund based on the strong investor demand it saw for its first, which, according to the company, recently closed at nearly double its target size.

Vanguard did not disclose the size of the first fund nor the target size of the new fund, which, like the first, is being offered to a “select and sophisticated subset of institutional clients” primarily through Vanguard Institutional Advisory Services, its outsourced chief investment officer (OCIO) service, according to a spokeswoman. She added that the company has “intentions to broaden availability over time.”

In a statement, Fran Kinniry, head of private investments at Vanguard, said, “The strong investor demand we saw for private equity in our first year further solidifies our belief that private equity can improve investor outcomes.” 

The new fund, like Vanguard’s first private equity fund, is a partnership with HarbourVest, an independent, global private markets investment specialist.

A new report from Vanguard, The Case for Private Equity at Vanguard, describes the significant role that private equity can play in institutional clients’ broadly diversified portfolios and recommends an allocation to private equity for long-term portfolios for investment advisory clients, “where suitable and appropriate.” Investors with access to diversified programs from top private equity managers received significant financial benefits over time, according to the report.  

Vanguard’s new private equity fund, like its predecessor, will invest globally in enterprises at multiple stages of development — venture capital, special situations, buyouts and growth equity — providing exposure to about 700 leading portfolio companies and some of the world’s top general partners, according to a spokeswoman.