Jack Bogle became a legend by popularizing low-cost passive index funds at the Vanguard Group, which he founded in 1975 after spending the first 23 years of his career at Wellington Management. “Don’t look for the needle in the haystack. Just buy the haystack,” he famously mused. That philosophy—be the market, don’t try to beat it—spawned generations of index fund-loving, buy-and-hold “Bogleheads” who have made Vanguard into what it is today: a $10 trillion-in-assets mutual fund colossus serving more than 50 million individual customers.

Over the same half-century, private equity was also growing into a more than $10 trillion-in-assets industry—in a very different way. This one was built on the promise of market-beating returns produced by managers demanding high fees: usually a percent of assets (typically 2% a year) and a hefty cut of profits (typically 20%). Plus they insisted on a long-term commitment of assets by their institutional investors, inclu­ding pension funds, college endowments and foundations.

Vanguard, which Bogle set up to be owned by its investors, has produced a lot of prosperous retirees but zero money-manager billionaires. Private equity, with its profit share (known as carried interest), has minted dozens of them. Stephen Schwarzman, chairman, CEO and cofounder of Blackstone, the world’s largest private equity manager with more than $1 trillion in assets under management, is worth an estimated $50 billion.

So it was a bit jarring, culturally and historically speaking, when Vanguard and Wellington announced in April that they had formed a “strategic alliance” with Blackstone to offer products for individual investors blending private and public market assets.

Jarring but maybe not so surprising given that the heavyweights of private equity and retail distribution are now pairing off with an urgency that suggests they’re desperate to avoid missing out on the next big moneymaking opportunity: getting into Americans’ 401(k)s and IRAs, which hold $29 trillion in assets. And the Trump administration aims to help them.

In February, Boston’s State Street Investment Management, which created the exchange-traded-fund business back in 1993, kicked off the action by offering the first ETF with a mix of public and private debt, with the latter sourced from private equity giant Apollo Global ($785 billion under management). Then, a couple months later, State Street announced the launch of an “Index Plus” retirement target date fund series—90% index funds with a 10% kicker of Apollo private market assets. In May, Empower, a top player in the market for small-company 401(k)s, said it’s working with Apollo, Franklin Templeton, Goldman Sachs and others to offer retirement savers collective investment trusts containing a mix of private equity, private credit and real estate. And in July, Voya Financial, another big 401(k) player, announced it was teaming up with private credit’s Blue Owl Capital on a new series of blended products.

There’s no mystery why private asset mana­gers are keen to play. After years of beating public stock markets, private equity’s average annual return has lagged stocks by more than three points over the last three years (see “Turn of Fortunes”). A slowdown of exit deals has led to a glut of aging assets in private equity funds. New funds raised by the industry have plunged 39% since 2021 as clients have fewer payouts to reinvest and some college endowments and........

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