The world’s largest investment firm, Vanguard, will begin offering private equity in its suite of funds, starting with large investors such as endowments, pensions, and other institutions, the firm said Tuesday.

The move represents a fundamental shift for Vanguard, which has long built its reputation on low-cost mutual and index funds. Private equity generally charges higher fees for investors, though at least one expert expects that Vanguard will aim to be among the cheapest in this higher-cost category.

Vanguard and Boston-based HarbourVest formed a partnership to provide what are known as “qualified” investors with private equity and “the potential to earn higher returns and achieve increased diversification,” Vanguard said in a news release.

“We are entering the private-equity market the Vanguard way — partnering with a world-class adviser to provide a high-quality offer,” Vanguard CEO Tim Buckley said in the statement.

It’s not the first time Vanguard has waded into private equity. In 2001, Vanguard failed to raise enough money to launch this alternative asset class. But the firm’s assets now dwarf those of most other Wall Street firms, at $6.2 trillion at year-end 2019. And private equity, which can involve investing directly in companies, is bigger now and far more popular.

“Private equity will complement our leading index and actively managed funds, as we seek to broaden access to this asset class and improve client outcomes. While this strategy will be initially available to institutional advised clients, we aim to expand access to investors in additional channels over time,” Buckley said.

“For individual investors, in particular, this partnership will present an incredible opportunity: access and terms they could not get on their own,” he said.

Typically, private-equity firms charge fees that are similar to hedge funds and other alternatives: 2% of assets a year in management fees, plus 15% to 20% or higher in annual performance fees. Generally, money is locked up for years with little liquidity.

The new private-equity strategy will initially be available only to pensions, endowments, and foundations. It’s unclear when Vanguard will file with regulators to offer these funds.

Chris Philips, head of Vanguard Institutional Advisory Services, said in the release: “While these organizations may want exposure to the opportunities available in the private markets, it can be challenging to access leading private-equity managers and invest with discipline and skill. Through this partnership, Vanguard’s portfolio construction and investment committee governance capabilities will be complemented with HarbourVest’s private market expertise.”

“Vanguard is a world-class asset manager with a commitment to providing their clients with access to private equity,” said John Toomey, managing director at HarbourVest, which manages $68 billion.

Market watchers called the move Vanguard’s first salvo in cutting private-equity fees, as well as expanding the suite of funds available through its financial-planning platform, called Personal Advisor Services.

In 2001, Vanguard inked a deal with Hamilton Lane Advisors, a Bala Cynwyd-based private-equity adviser, to put together a fund-of-private-equity-funds to offer to its high-net-worth clients, such as those in its Flagship program, plus institutions.

Claiming the funds would outperform indexes, Vanguard in 2001 said it would charge a fee of 0.85%, then hand 0.50% of that over to Hamilton Lane while keeping the other 0.35%.

Investors, however, would not only pay this fee to Vanguard, but would also be paying the underlying 1% to 3% annual fees for each private-equity fund the portfolio invested in, plus the 20% to 30% of profits, or so, that typically goes to the private equity fund’s advisers.

While that was nearly two decades ago in a time of higher fees, it illustrated how this kind of product is typically expensive. Vanguard planned to raise at least $100 million and as much as $750 million for the fund between November 2001 and March 2002. It never happened.

But this time may be different.

“While everyone is focused on seeing where Vanguard comes in on costs, I’m most curious to see the structure of the fund,” said Jeff DeMaso, head of research at Adviser Investments, which publishes a monthly newsletter on all things Vanguard.

“Will it be a daily liquid fund or an interval fund with limited liquidity on the back end? Personally, I’d be concerned about owning private equity in a fully daily liquid fund.” That’s because private is generally invested long term. So the companies would have to have enough cash available — if it’s a typical mutual fund — to allow people to sell at any time.

This is Vanguard’s latest step pivoting toward institutional investors and advisers, at least when it comes to product development.

“It seems this will be rolled out to individuals eventually,” DeMaso said. He concedes that Vanguard makes a “fair point about access and terms, but the big question is whether individual investors ‘need’ to own private equity in the first place” given its higher risks.

“I’m skeptical,” DeMaso said.