Goldman Sachs is putting down up to $1 billion for a 3.5% stake in asset manager T. Rowe Price, the firm confirmed Thursday, according to Yahoo Finance.
The goal is to flood the retirement market with access to private assets (stuff like real estate, infrastructure, credit, and private equity) things that were once only offered to institutional investors.
Now the plan is to make them available to everyday Americans, especially those saving for retirement.
The partnership wants to build a system that lets these alternative assets flow directly into the hands of retirees, account sponsors, and financial advisers. Goldman CEO David Solomon said this collaboration “represent[s] our conviction in a shared legacy of success delivering results for investors.”
He also said that with Goldman’s “decades of leadership innovating across public and private markets” and T. Rowe’s “expertise in active investing,” clients can expect better access to new ways of saving for retirement and building wealth.
T. Rowe Price saw its stock jump by as much as 9% on Friday after the announcement. Goldman shares also ticked up, but by a smaller margin. T. Rowe CEO Rob Sharps said:
Goldman and T. Rowe prep co-branded portfolios
Part of the joint plan includes launching target-date funds that mix public stocks, bonds, and private assets. These hybrid funds are set to roll out by the middle of next year. This would bring private investments straight into retirement portfolios in a way that hasn’t really existed before.
The two companies also want to launch co-branded portfolios and offer financial advice, targeting both mass affluent and high-net-worth investors.
Meanwhile, just this Thursday, Citigroup said its wealth unit would begin working with BlackRock under a new agreement. That deal will give BlackRock control over $80 billion in Citi’s wealth client assets.
Over time, those funds will also include private market strategies. Citi said the rollout would begin in the fourth quarter.
This wave of Wall Street-private asset pairings comes after President Trump signed an executive order last month. The order directs the Securities and Exchange Commission to let cryptocurrencies and other alternative assets into 401(k)s and retirement accounts. That’s opened the door for big players like Goldman to go all-in on pushing these products through.
Before this, private assets were largely out of reach. These investments are harder to sell, come with more fees, and usually require long lockups. They were built for institutional investors, not school teachers, engineers, or small business owners.
But the potential for profit has outweighed the challenge. With the rule changes in place, asset managers are rushing in.
Apollo Global Management, Partners Group, and KKR have each partnered with more traditional asset managers too. These include State Street, BlackRock, and Capital Group. The goal across the board is clear: pull retail money into alternative investments while the iron is hot.
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Source: https://www.cryptopolitan.com/goldman-t-rowe-wall-street-retirement-cash/
