One thing to start: Farewell to David Bonderman, private equity pioneer and co-founder of TPG, who has died at the age of 82. He entered the world of high-stakes buyouts in his late 40s after first making his name as a lawyer and preservationist.
And on a lighter note: Happy 400th birthday to the world’s oldest bond. Our friends over at FT Alphaville are in their best (and wonkiest) form as they bring us the story of a four-century-old goatskin perpetual that still pays €13.61 of interest a year. It is “a genuine wonder of finance, and a physical reminder of how bonds built the world we live in.”
In today’s newsletter:
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Larry Fink plays ringmaster to his newly recruited private capital lions
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Vanguard doubles down on wealth management
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Donald Trump’s election win sparks trading surge for banks and brokers
BlackRock’s billionaire bonanza
BlackRock has nine new billionaires due to come on the payroll, following its $28bn acquisition tear this year.
This month’s $12bn-plus deal for private credit specialist HPS will make billionaires of Scott Kapnick and the other two founders. Its follows BlackRock’s $12.5bn purchase of Global Infrastructure Partners earlier this year, which collectively made five GIP founders the second-largest BlackRock shareholder; and its £2.55bn deal for private markets data provider Preqin minted a UK billionaire in its founder Mark O’Hare.
In this timely opinion piece, my colleague Brooke Masters in New York explores how buying a bonanza of billionaires is one thing. Keeping them in line is quite another.
The top two GIP executives have already joined BlackRock’s global executive committee and the three HPS founders will follow suit. GIP chair Adebayo Ogunlesi also sits on the BlackRock board of directors, while Kapnick will become an observer.
Ogunlesi and Kapnick are towering Wall Street figures, with entrepreneurial chops in precisely the areas where the world’s largest asset manager wants to grow. Each has staked his personal wealth and substantial reputation on becoming part of what BlackRock founder Larry Fink likes to refer to as “One BlackRock”, with all the cross-selling and joint product development that implies.
In practice, management meetings with that many newly minted billionaires in the room are going to be something to behold. These are men accustomed to running their own shows.
Now they must deal with one another, the other BlackRock executives and the constraints of being part of a 20,000-employee public company. Fink, of course, is more than qualified to play ringmaster to his newly recruited private capital lions. He has also been grooming a new top team of internal candidates for more than a decade.
All of this ramps up the pressure for clarity on what happens after Fink steps back.
The BlackRock founder, who recently turned 72, currently shows no sign of slowing down. But investors and BlackRock’s board cannot afford to be complacent, writes Brooke. The company is due to appoint a new lead independent director in 2025. That person should take a fresh look at transition planning and consider whether the pool of possible candidates is large and deep enough. The bigger Fink’s shoes grow, the harder they will be to fill.
Vanguard doubles down on wealth management
Vanguard’s first chief executive to come from outside the group is wasting little time in setting his stamp on the world’s second-largest money manager.
Last week CEO Salim Ramji and president Greg Davis announced the $10tn asset manager’s largest restructuring in a decade, in which it will carve out its $900bn wealth and advice business into a separate unit.
Vanguard has been pushing into personalised advice since 2015 in a bid to diversify beyond its dominant position in low-cost and index funds. The restructuring is intended to accelerate this by speeding investment and meeting rising demand.
While Vanguard’s personal adviser services were initially limited to clients with more than $50,000, the group added an all-digital option for smaller accounts in 2020. Vanguard significantly expanded the potential client base in September by dropping the minimum holding to $100.
“Clients really liked that offering. They wanted more,” said Ramji. “We have a real opportunity to democratise advice and wealth management more broadly.”
Vanguard and other asset managers are fending off rising competition from fintechs, banks and alternative asset specialists. More and more clients are looking for help navigating an increasingly complex investment landscape.
Last week Vanguard also announced that it is overhauling its UK platform fees.
The changes are aimed at helping the company to cover the “rising cost” of servicing customers who choose their own investments, Vanguard said, while encouraging less experienced investors to have their money managed by the company.
Vanguard will introduce an account fee of £4 a month for “DIY” customers with up to £32,000 invested across Isas, personal pensions and general accounts. The previous charge of 0.15 per cent a year will still apply to balances above £32,000, and the total will be capped at £375.
But the change will make it more expensive for customers with less than £10,000 to invest compared with rivals, including AJ Bell and Hargreaves Lansdown.
Chart of the week
Donald Trump’s election victory last month ignited a trading frenzy at brokerage houses and Wall Street banks as expectations for sweeping policy changes added fuel to a US stock rally.
Trading volumes in US equities jumped 38 per cent in November from the same month in 2023, reaching levels not seen since the meme stock craze of early 2021 and this month are still running above their average for the year, according to exchanges operator Cboe Global Markets.
The jolt of trading activity swept through brokerages preferred by retail clients, such as Interactive Brokers and Robinhood, as well as institutional powerhouses including JPMorgan Chase and Citigroup. It comes as expectations that Trump will take a more business-friendly approach sent investors pouring into US stocks after the November 5 election.
Trading activity has also been boosted more broadly by a strong year in US markets, with Wall Street’s S&P 500 index rising 27 per cent year to date to a series of record highs.
There has been an “incredible level” of investor interest in markets in recent months, and “that does translate into trading activity”, Rick Wurster, who is due to take the reins as chief executive of brokerage Charles Schwab in January, told the Financial Times.
“I don’t think turning the calendar to 2025 is going to change it,” he added.
The increase in activity is also benefiting Wall Street’s biggest banks.
JPMorgan Chase’s trading revenues in the final three months of 2024, including the weeks around November’s election, were on track to rise “a touch better” than 15 per cent from a year earlier, retail banking chief Marianne Lake said at last week’s Goldman Sachs financial services conference.
That figure is more than triple the 5 per cent gain analysts had been forecasting before Trump’s victory, according to data from Bloomberg.
Five unmissable stories this week
Rachel Reeves has put a review of pensions on hold after fears it could force employers to increase their contributions to staff retirement pots by billions of pounds. The chancellor wants to avoid putting any more pressure on business following an angry backlash over her Budget.
Citadel has poached a second London-based portfolio manager from rival Elliott Investment Management, suggesting Ken Griffin’s hedge fund is looking to adopt activist tactics.
Chief executives of London-listed companies should be able to be paid like “top-rate footballers” without facing a backlash, according to billionaire financier and ICAP founder Lord Michael Spencer.
US investors have saved $250bn by investing in exchange traded funds rather than traditional mutual funds, since their creation in 1993, according to calculations by Bank of America.
BlackRock is launching a new suite of funds for wealthy individuals to access its private markets products, the latest sign that alternative assets are of central importance to its future.
And finally
Palazzo Citterio in Milan has finally reopened, giving the city a stunning new gallery of modern art, packed with masterpieces. It has taken 50 years, contributions or obstructions from 30 governments and countless stop-and-start interventions to its splendid baroque building, writes our chief visual arts critic Jackie Wullschläger.
Read the full article here