Wall Street is racing to get private markets into the portfolios of everyday investors. Now an insurance company is getting into the game and thinks it has an edge.
Life insurer Lincoln Financial is teaming up with Bain Capital and Partners Group to launch two funds aimed at individual investors, executives said.
The funds will be marketed through the roughly 60,000 financial advisers Lincoln already works with to sell annuities, life insurance and other products. Chief Investment Officer Jayson Bronchetti said it would take many private-markets firms 10 or 15 years to replicate its distribution network.
“That’s a reason why partners want to work with us,” he said.
The funds, which Lincoln expects to launch later this year, will join an increasingly crowded field of private-markets offerings for individual investors. Institutional investors such as pension funds have largely maxed out their allocations to private markets, and firms such as Blackstone, Apollo Global Management and Ares Management have been rolling out products targeting everyday investors in search of new sources of growth.
Marketing such products requires an extensive sales force to get them in front of financial advisers who in turn suggest them to clients. Firms have either invested heavily to build their own distribution networks or struck mergers or partnerships with those that already have them.
Radnor, Pa.-based Lincoln thinks it is the first insurance company to launch private-market funds.
Private markets are also a major investment area for Lincoln, accounting for about half of its $130 billion general account, Bronchetti said. Lincoln will be a significant investor in both new funds.
Insurance companies invest policyholder premiums with the goal of earning more than they must pay out.
Lincoln’s fund with Bain will invest in a cross section of credit, including loans to companies and loans to finance purchases of assets such as cars and real estate. A portion of the fund will also be invested in more easily traded assets. The vehicle will accept investors of any wealth level and allow them to cash out once a quarter.
The Partners-advised fund will invest in royalties linked to areas such as sports, pharmaceuticals and brands. It will buy royalty streams directly and invest in credit tied to them. It will also be accessible to all investors and will offer quarterly share repurchases.
