Blackstone Launches Unit to Channel Retirement Savings into Private Investments

Leading asset manager Blackstone (BX.N) announced on Wednesday that it has launched a new unit aimed at expanding access to private market investments for retirement funds worldwide — an opportunity that could represent a multi-trillion-dollar market in the United States alone.

Interest in opening retirement savings to private investments surged in August when former U.S. President Donald Trump signed an executive order directing the Labor Secretary and the Securities and Exchange Commission (SEC) to make it easier for everyday savers to invest in alternative assets through popular 401(k) retirement plans.

Alternative assets typically include private equity, private credit, real estate, and, in some cases, cryptocurrencies.

In a statement, Blackstone said the new division will focus on building partnerships and developing investment products tailored for defined contribution (DC) plans — systems in which both employers and employees contribute, but which do not guarantee a fixed return upon retirement.

The new unit will operate within Blackstone’s private wealth business, which currently manages approximately $280 billion in assets.

Supporters of greater retail access to private investments argue that it could help more individuals earn higher potential returns. Critics, however, warn that such assets come with higher risks and fees compared to the traditionally preferred, highly regulated, publicly traded securities found in most 401(k) plans.

“Over the decades, the world’s largest and most sophisticated institutional investors have benefited from the strong returns and diversification offered by private markets,” said Blackstone President and Chief Operating Officer Jonathan Gray. He added that Blackstone aims to become “the partner of choice for retirement solutions providers.”

Blackstone also announced that Heather Von Zuben will head the new division, stepping down from her previous role overseeing open-ended credit funds. Tom Nides — former U.S. Ambassador to Israel and longtime Morgan Stanley banker — will serve as chair of the business. Paul Quinlan, who previously served as Chief Financial Officer of Blackstone’s real estate division, will lead the U.S. segment of the new operation.

Several other private market firms, including Apollo Global Management and Blue Owl Capital, have also formed partnerships with asset managers to develop defined contribution investment options that blend public and private assets.

According to the Investment Company Institute, Americans held roughly $9.3 trillion in 401(k) plans as of June 30, underscoring the immense potential of the market Blackstone is seeking to tap.