Are Private Markets Worth It? Vanguard’s Fran Kinniry on Risks, Rewards, and Realities (EP.202)

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Apr 30, 2025

Fran Kinniry, a Senior investment executive at Vanguard known for his expertise in private investments, joins the conversation to dissect the allure of private equity and credit. He discusses the trend of companies remaining private longer and the implications for public markets. Kinniry emphasizes the significance of understanding the illiquidity premium and the criticality of manager selection for successful private investing. He also explores how these assets might one day find a place in retirement plans, reshaping investment strategies for the future.

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INSIGHT

Private Equity Diversifies Portfolio

Private equity offers diversification by including companies that remain private longer.
This expands the opportunity set beyond public equity for potentially comparable or better returns.

INSIGHT

Understanding Illiquidity Premium

Illiquidity premium in private equity has historically been about 300 basis points.
It may shrink as the asset class grows, but investors with long horizons could benefit from accepting less liquidity.

ADVICE

Choose Top Quartile Managers

Avoid median or below-median private equity managers due to wide performance dispersion.
Partner with firms like Vanguard for access to top quartile managers and better investment outcomes.

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Private equity and private credit are booming—but should they have a place in your portfolio?

Vanguard’s Fran Kinniry joins Peter Lazaroff to break down the real opportunities, the hidden risks, and the essential considerations for investing in private markets.

Listen now and learn:

► Why companies are staying private longer—and how that changes public markets

► What investors need to understand about the illiquidity premium

► Why access and manager selection are critical to private investment success

► How private equity and private credit could (or could not) fit into your retirement strategy

Fran also shares his perspective on whether private assets might someday appear in 401(k) target-date funds—and what that could mean for the future of investing.

Show notes and links available at thelongterminvestor.com.

(00:00) Introduction to Smart Investing

(02:03) The Value of Private Investments

(04:30) Understanding Illiquidity Premium

(06:29) The Importance of Manager Selection

(09:39) Risks of Democratizing Private Equity

(11:39) The Rise of Private Credit

(14:18) Portfolio Construction Challenges

(16:18) Current Income vs. Diversification

(18:07) Allocating to Private Markets

(20:34) Accessing Private Investments

(22:11) Questions for Advisors

(24:03) The Future of Private Assets in Retirement Accounts

(28:45) Incremental Benefits of Private Assets

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