BlackRock Inc. BLK has entered into a strategic alliance with Partners Group to introduce a multi-private markets models solution, boosting retail investors’ accessibility to alternative investments.
The solution will offer access to private equity, private credit and real assets in a combined portfolio currently unavailable in the U.S. wealth market.
This will enable advisors to offer a diversified alternative portfolio, combining the simplicity, efficiency and practice management benefits typically found in traditional public markets models.
Rationale Behind BlackRock’s Collaboration
This solution will enable simplified access through a single subscription document against the separate subscription document requirements for each underlying fund. It will offer robust operating procedures and risk management, including model rebalancing and diversified private market asset allocation.
Retail wealth investors can select from three risk profiles to allocate investments across BlackRock and Partners Group funds. This includes BlackRock’s private equity, private credit and systematic funds, and Partners Group’s private equity, growth equity and infrastructure funds.
This strategic partnership combines BLK’s experienced alternatives team, operational expertise and whole portfolio capabilities with Partners Group’s extensive investment platform and portfolio management capabilities.
Mark Wiedman, head of BlackRock’s Global Client Business, said, “We are simplifying how individual investors and advisors access private markets. In a world where private markets are growing by $1 trillion or more every year, many financial advisors still find it too difficult to help their clients participate. We aim to crack that.”
Retail wealth investors have been adopting the private markets for access to companies and assets unavailable in public markets, aiming to earn uncorrelated returns. In 2020, these investors allocated $2.3 trillion to private markets, which is anticipated to rise to $5.1 trillion by 2025, per a Morgan Stanley/ Oliver Wyman study. Further, BLK projects managed model portfolios to roughly double in assets under management within five years, turning into a $10 trillion industry.
Other Strategic Efforts Undertaken by BLK
BLK views a significant growth opportunity in the U.S. private wealth market and remains engaged in actively enhancing its position to become an integral and whole portfolio partner to advisors.
This June, the company agreed to acquire Preqin for $3.2 billion, marking a significant milestone in its strategy to enhance the company’s private markets capabilities by integrating investments, technology and data across the entire portfolio.
Further, BlackRock entered into a strategic partnership with GeoWealth, a financial technology firm, to expand its capabilities to cater to the needs of clients in the $37 trillion U.S. wealth market.
BLK aims to offer custom models via GeoWealth’s platform, enabling advisors to address client demand for private markets, direct indexing and fixed-income separately managed accounts alongside traditional exchange-traded funds and mutual funds, all within a single account.
These moves align with the company’s growth strategy via improving BLK’s product mix and deepening its presence in the targeted markets.
BlackRock’s Zacks Rank & Price Performance
Year to date, shares of BlackRock have gained 9.1% compared with the industry’s 14.5% growth.
Image Source: Zacks Investment Research
Currently, BLK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Restructuring Initiatives by Other Finance Firms
Last week, State Street Corp.’s STT asset management business, State Street Global Advisors, announced its partnership with Apollo Global Management Inc. APO and its affiliates to enhance investor’s accessibility to private market opportunities.
By leveraging the strengths of STT and APO, this strategic alliance is set to pave the way for investors to invest in private markets, thus appealing to a wider client base.
Similarly, SEI Investments Co. SEIC announced the integration of investment vehicles from KKR into its platform. This will enhance users’ accessibility to private markets. The platform is used by registered investment advisors, broker-dealers and other clients.
SEI Investments’ e-subscription technology offers better access to alternative investments, improved processing efficiency and an enhanced advisor and client experience.
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