BlackRock has unveiled a “first-of-its-kind” model portfolio for US investors that delivers access to both private and public market assets in a single account.
The global asset management giant’s public-private model portfolio was produced using GeoWealth’s unified managed account (UMA) technology and iCapital’s underlying technology capabilities.
GeoWealth is a financial technology and turnkey asset management platform, while iCapital is a fintech platform that enables asset managers and distributors to expand access to private markets.
According to BlackRock, this marks the first time that a customisable model portfolio offers access to both private and public markets alongside each other via an UMA structure. It was launched off the back of rising adviser demand for allocations to both markets as investors seek greater diversification and returns.
The announcement also follows BlackRock’s completed acquisition of private markets research house Preqin earlier this month for a total consideration of US$3.2 billion ($4.8 billion).
“This launch represents a significant step forward, helping advisers allocate across both public and private markets all in one unified, professionally managed portfolio,” commented Jaime Magyera, co-head of BlackRock’s US wealth advisory business.
“BlackRock’s mission is to make investing easier and help more people access the full power of capital markets. Through our partnership with GeoWealth and iCapital, we are doing just that, helping advisers deliver differentiated service and outcomes for their clients across their whole portfolio.”
Netwealth and JP Morgan Asset Management (JPMAM) also have existing partnerships with iCapital to boost investors’ access to alternative and private market assets. Earlier this month, Lonsec announced it will be utilising the deal with Netwealth and iCapital to launch a wholesale individually managed account (IMA) option focused on alternative assets.
While the product is only available to BlackRock’s US customers, Toby Potter, chair of the Institute of Managed Account Professionals (IMAP) said he was already seeing private markets come to fore in the managed account space.
Drummond Capital Partners launched a private markets separately managed account (SMA) for wholesale investors last year on the BT Panorama platform and this is expected to be opened up to the retail market in due course.
“This move is symptomatic of the drive to have private markets included in managed accounts. The interest in private markets is growing rapidly, he said.
“I could see something like this offered in Australia; there are already listed vehicles which invest in private markets so nothing would stop people from putting these or an active ETF in their model portfolio or as part of their separately managed account.”
BlackRock said it expects managed model portfolios to double in assets over the next four years from US$5 trillion ($8 billion) today to approximately US$10 trillion ($16 billion).
In Australia, the firm has been offering managed accounts for a decade now. BlackRock accounts for $6.5 billion in assets under management in the managed account space, with its range including ESG, index, active, ETF and international options.
Lawrence Calcano, chairman and CEO of iCapital, said the partnership with BlackRock will enable advisers to easily incorporate alternative investments into their strategies in a simplified way.
“We believe models will be an important way for advisers to allocate to private markets, and iCapital’s underlying technology allows our clients to customise what they want to buy or deliver into the market,” he said.
Colin Falls, chief executive of GeoWealth, recognised that while advisers and asset managers have long appreciated the role of private market investments, the real challenge has been integrating them at scale in a wealth management business.
“GeoWealth’s UMA technology and workflow solutions, in partnership with BlackRock and iCapital, creates an entirely new paradigm for advisers considering a public-private portfolio,” he also said.
Demand for private market investments continues to grow in Australia as the space is further democratised for retail investors. According to Hamilton Lane, Australian advised clients exhibit the highest enthusiasm for the asset class out of all the regions, with 61 per cent of clients described as “very interested”.
