BlackRock agreed to acquire the remaining equity interest in SpiderRock Advisors, a provider of customized options overlay strategies. The deal strengthens Blackrock's separately managed accounts business.
“By giving BlackRock more SMA capabilities, this acquisition will enable us to meet the growing demand from wealth managers for customized, tax-efficient portfolios,” Joe DeVico, co-head of BlackRock's business- it in the US Wealth Advisory. “We look forward to fully integrating SRA's team and capabilities into our US Wealth Advisory business and further expanding our offerings in SMA solutions.”
The popularity of SMAs has continued to grow. Cerulli Associates predicted that assets in SMA and unified managed account programs will exceed $2 trillion this year. Additionally, a recent Escalent survey of 403 financial advisors found they expect to increase average SMA allocations from 18% to 26% between now and 2025. Advisers serving high net worth investors expect to increase SMA allocations from 23% to 31% over the same period. Morningstar too Added third-party SMAs from several asset management firms on its US wealth platform last month.
BlackRock managed $186 billion in SMA as of December 2023. The firm's SMA franchise specializes in providing customized strategies, including Aperio's direct indexing capability and actively managed fixed income, equity and multi-asset strategies active. BlackRock previously made a minority investment in SRA in 2021. She too earned Aperioa creator of customized index strategies, in 2020.
“We are excited to fully join the BlackRock team and expand access to SpiderRock Advisors' options management solutions for both taxable and tax-exempt investors,” Eric Metz, president and CEO, said in a statement. of SpiderRock Advisors investments. “Innovative advisors and investors understand the value of options in their portfolios to better manage risk as we navigate a challenging capital markets landscape. We look forward to leveraging BlackRock's global reach and deep industry relationships as we look to help more advisors deliver tailored options strategies to empower their clients to achieve their after-tax investment goals.”
SRA managed approximately $4.8 billion in client assets as of February 2024. The firm's SMA strategies are focused on income and risk management for single securities as well as diversified portfolios using derivative overlay strategies, and are accessible through RIAs, family offices, national brokers/dealers and institutional channels.
Financial terms of the deal were not disclosed.