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. The model portfolio will provide access to BlackRock and Partners Group's existing funds, primarily funds with limited liquidity across all major private market asset classes. A joint investment committee will review and manage portfolio positions over time and may also add new funds to the portfolio.
“Putting it all together is innovative, but everything underlying it is proven,” said Joseph DeVico, co-head of US Wealth Advisory, BlackRock. “That's what's special about it. You have these two great firms coming together to solve this important problem.”
The 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 (conservative, moderate or aggressive) to determine allocations to BlackRock and Partners Group funds, including BlackRock's private equity, private credit and systematic funds, and Partners Group's private equity , growth capital and infrastructure funds.
“At the push of a button, you get instant access to world-class content and world-class professional management. It's a simple, quality, powerful and scalable solution. We're calling it an iPhone moment for us,” added Robert Collins. co-head of the Private Wealth for Partners Group.
It will be open to qualified investors with $2.2 million in net worth. The partnership will provide details on investment minimums and the portfolio's liquidity profile going forward, but anticipates that the liquidity mechanism will be similar to how typical semi-liquid funds operate with monthly or quarterly subscription and redemption rates.
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.
This is BlackRock's second recently announced partnership to build private market 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
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.
Correction: September 12, 2024
This story has been updated with further information on the model portfolio and live quotes from executives at Partners Group and BlackRock.