Active fund manager
Blackstone Group (BX) is an alternative investment asset manager with almost $290 billion in assets under management as of December 31, 2014. The company also provides financial advisory services to clients around the globe. Two of Blackstone’s primary limited partners are corporate and public pension funds. Limited partners commit capital to private equity players to earn better returns than indexed returns.
Alternative investment management is an active style of investing. It attempts to outperform the major indices, such as the S&P 500 (SPY), instead of replicating returns as is the case in passive fund management. Active fund management generally requires a performance fee over and above a certain fixed fee for managing funds.
Blackstone’s alternative asset management includes investment vehicles focused on private equity, real estate, hedge fund solutions, fund of funds, non-investment grade credit, and multi-asset class exposures outside of other funds’ mandates. The company also provides these financial advisory services:
- financial and strategic
- restructuring and reorganizing
- capital markets
- fund placement
Inorganic growth strategies
Blackstone pursues inorganic growth strategies to expand its market and foray into different product categories. These are some of the company’s high-profile investments and acquisitions:
- Strategic Partners Fund Solutions – private equity arm of Credit Suisse (CS)
- Vivint – security provider
- CT Investment Management – an investment management unit of Capital Trust
- GSO Capital Partners LP
Blackstone faces competition in the alternative management space from The Carlyle Group LP (CG), KKR & Co. (KKR), Apollo Global Management (APO) and T. Rowe Price Group (TROW), all of which are known to pursue similar inorganic growth strategies. TROW makes up 0.72% of the Financial Select Sector SPDR Fund (XLF).
The company's revenue model is based on charging management and performance fees for managing the portfolios in its investment advisor firms.
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