Asset management giants BlackRock and Partners Group have teamed up to launch a model multi-private markets portfolio. The product, which will debut next year, will include private equity, private credit and real assets in a single portfolio and will be managed by both firms.
The partnership combines BlackRock's alternative team and portfolio capabilities powered by Aladdin technology with Partners Group's experience bringing private market funds to the wealth market and leveraging its investment platform and portfolio management capabilities.
“We're simplifying the way individual investors and advisors access private markets,” Mark Wiedman, head of BlackRock's global client business, said in a statement. “In a world where private markets are growing by $1 trillion or more annually, many financial advisors still find it very difficult to help their clients participate. We intend to hit it. With Partners Group, we are creating a single, managed account with unified portfolio construction and management.”
The partnership is the latest in a broader trend of asset managers come together to develop alternative investment products for the property market. Another recent example is Capital Group Companies, which formed a joint venture with KKR in May to develop new hybrid public/private products focused on credit, equity, infrastructure and real estate for mass affluent investors. The first products from the partnership are expected to debut in 2025.
The BlackRock/Partners Group model portfolio will allow investors access through a single subscription document rather than requiring them for each underlying fund. It will present operating procedures and risk management, including model rebalancing and asset allocation in private markets. Retail wealth investors can choose from three risk profiles to determine allocations to BlackRock and Partners Group funds, including BlackRock's private equity, private credit and systemic funds and Partners Group's private equity, growth capital and infrastructure funds .
The model portfolio will be open to qualified investors with $2.2 million in net worth. BlackRock and Partners Group did not disclose the size of the minimum investment to participate or other specifics of the funds. An individual who wants a 10% allocation to the private markets can do so through a single investment.
This is BlackRock's second recently announced partnership to build private markets model portfolios. In June, it announced it would be working with Chicago-based GeoWealth to provide private equity and debt funds in customized portfolios for financial advisors
“This separately managed account solution has the potential to revolutionize the wealth management industry, setting a new benchmark for institutional-quality programs that meet the portfolio needs of private markets wealth investors,” the Executive Chairman said in a statement. of Partners Group Steffen Meister. “Business financing has undergone a major transformation in recent decades with private markets playing a key role in the real economy, so it is vital that investors have access to private markets investments as part of a balanced portfolio.”
The adoption of alternative investments in the wealth channel has increased. According to data from investment banking firm Robert A. Stanger & Co., fundraising for alternative investments by retail investors is on pace to reach $115 billion in 2024 only in products with limited liquidity, including non-traded REITs, interval funds and business development companies.
The use of model wallets is also on the rise, an area Blackrock has anticipated could rise to $10 trillion in the next five years. In addition, a recent study by Cerulli of asset managers and third-party model providers found that 30% of model portfolio AUM is allocated to custom model portfolios, while 70% of total model portfolio assets are still allocated to off-the-shelf model assets.
The new product is not the only alternative investment model portfolio on the market. In May, iCapital launched the iCapital Multi-Asset Portfolio, including a mix of private equity, private credit and real assets through five funds operated by alternative asset managers, including Blue Owl Capital and Nuveen.
BlackRock and Partners Group have also recently gone public a common white paper on private markets.