Steve Blewitt: A Veteran's Perspective
Steve Blewitt's career in asset management kicked off in 1982 at John Hancock, where he worked in the group pension actuarial department. Fast forward to Manulife's acquisition announcement of John Hancock in 2003, and Blewitt had already risen to become the head of Hancock Capital Management—a position he maintained for over 18 years before shifting his focus to academia and the non-profit sector in 2023.
During his tenure, Blewitt witnessed firsthand the dramatic rise of alternative investments within institutional frameworks. He described his role as being a "direct investor" who predominantly catered to institutional clients. “We sold primarily to institutions,” he revealed in a recent interview, underscoring his deep involvement in this evolving market.
In his latest endeavors, Blewitt has been closely observing the increasing integration of alternative investments into retail spaces, primarily focusing on private market instruments. This interest prompted him to author his debut book, *Investing in Private Market Funds: Institutional Strategies for Individual Investors*. He remarked, “I wanted to take my institutional knowledge and adapt it for an individual looking at private market opportunities. I see people making mistakes that—if they just had more information—they maybe would have been able to avoid.”
He takes a contrarian stance on the perception that private markets are overly complex for retail investors. According to Blewitt, the fundamental principles behind private and public markets mirror each other more closely than many realize. “Equity is equity and debt is debt,” he stated firmly, indicating that the essence of investment in private markets parallels that in public markets, despite variances in execution and risk profiles.
When I challenged him regarding the comparison between private market loans and corporate bonds, he acknowledged that while smaller, middle-market companies might lack robust management structures—and thus pose greater risks—strategic partnerships with informed sponsors could mitigate these vulnerabilities. “There are differences, but again very, very similar,” he noted.
Blewitt concedes that much of the favorable data regarding private markets surfaced during comparatively stable market conditions. He expressed that in turbulent times, differentiating between managers based on their lending experiences will become more critical. “If there’s choppiness in the market, you are going to see separation,” he warned, highlighting the additional responsibilities this places on both advisors and investors.
He remains optimistic that private markets could offer superior diversification and long-term returns compared to public markets, pointing out that there’s already more analytical groundwork backing private equity. The wider dispersion of returns in private markets offers significant opportunities for savvy investors: “If you’re able to choose the top-quartile managers in private markets, even in a down market, you may still be able to do better than your investments in public markets,” he emphasized.
Understanding Market Dynamics
Blewitt shared an insightful thought on how some view the burgeoning alternative investments sector in retail. Many critics suggest that the growth isn't purely organic but rather a strategic pivot driven by a saturated institutional market. He candidly stated, “This is a business. You’re being sold a product, and there’s nothing wrong with that.”
However, this reality brings its own set of responsibilities. “Investors should not be just buying whatever their financial advisor is trying to sell,” he advised. Buyers need to look beyond the surface and explore diverse options that align with their individual investment goals.
Yet, here's the catch: Blewitt's belief that sufficient education about private markets can empower investors could very well be a double-edged sword. While it might hold true for a knowledgeable few, it likely overlooks the majority of retail investors who could lack the requisite insights to navigate this complex landscape. Advisors must bridge this knowledge gap by engaging in thorough due diligence and tailoring their approach based on each client’s unique circumstances.
Ultimately, the conversation Blewitt sparked around private market investments and their accessibility raises essential questions about how we equip retail investors with the knowledge and tools required to make informed decisions in a rapidly changing marketplace.
