BlackRock Inc. BLK is integrating private equity and credit investments into pre-built portfolios to cater to rising demand among individual investors. Jaime Magyera, co-head of BlackRock’s US wealth advisory business, revealed in an interview with Bloomberg.

Details of BLK’s Model Portfolios

BlackRock designed model portfolios that combine publicly traded stocks and bonds alongside more sophisticated private equity and credit funds, with plans to add other alternatives over time. The company claims the offering to be the first of its kind in the asset management industry.

The managed models enable financial advisers to provide alternative investment options to clients who previously had limited exposure to private markets.

Magyera stated, “For years, advisers have been looking for access to private markets. Being able to bring access to private markets lower down the wealth spectrum — which traditionally has been family office, ultra, ultra-high-net-worth — is the goal.”

Private markets would contribute roughly 15% to the total investments in the portfolios on average, which will be customizable. The fee to be charged was kept under wraps.

Rationale Behind BlackRock’s Move

BLK’s move aligns with the company’s recent strategic acquisitions, valued at nearly $28 billion, to enhance its private markets capabilities and capitalize on the rising demand for private markets, thereby generating higher fee income.

The company acquired Global Infrastructure Partners for $12.5 billion, Preqin for £2.55 billion ($3.3 billion), and is in the process of completing a $12 billion acquisition of private credit firm HPS Investment Partners.

Further, the company collaborated with Partners Group last year to combine a varied pool of private assets into a single portfolio of alternatives for retail clients.

Thus, the current product launch aligns with BlackRock’s strategy to expand its private markets capabilities and aims to offer diversified offerings to offer higher risk-adjusted returns to its investors.

Product Expansion Efforts by Other Finance Firms

Earlier this month, SEI Investments Co. SEIC announced the launch of SEI Strategies in collaboration with Capital Group to enhance tax solutions for its clients through model portfolios.

SEI Investments aims to capitalize on the rising demand for model portfolios as investors seek better tax solutions and investment strategies.

The newly launched model portfolios complement SEI Investments’ existing suite of core building block solutions for investor portfolios.

Similarly, Robinhood Derivatives, LLC, a wholly-owned subsidiary of Robinhood Markets, Inc. HOOD, launched a prediction markets hub directly within the Robinhood app, allowing customers to trade on the outcomes of several major global events, including the expected upper limit of the Federal Reserve funds rate in May.

The launch of the prediction markets hub aligns with Robinhood’s objective to become a full-service financial firm and compete with dominant derivatives brokers.

Initially, Robinhood’s prediction markets hub will be available across the United States through KalshiEX LLC, a Commodity Futures Trading Commission-regulated exchange.

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