That mutual fund in your
retirement plan may be moonlighting as a venture capitalist.
BlackRock Inc., T.
Rowe Price Group Inc. and Fidelity Investments are among the
mutual-fund firms pushing into Silicon Valley at a record pace, snapping up
stakes in high-profile startup companies including Airbnb Inc., Dropbox Inc.
and Pinterest Inc.
The investments could
pay off big if the companies go public or are sold, helping boost fund returns.
But, as the recent turmoil in the market for technology stocks and initial
public offerings has shown, such deals also carry major risks not typically
associated with mutual funds.
"These are unproven
companies that could very well fail," says Todd Rosenbluth, director of
mutual fund research at S&P Capital IQ. If things go badly for a startup,
"there may not be an exit strategy" for the fund firm.
for the full article in the Wall Street Journal.