Asset management giants BlackRock and Partners Group have teamed up to launch a multi-private markets model 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 alternatives team and portfolio capabilities powered by Aladdin technology with Partners Group’s experience bringing private market funds to the wealth market and tapping into its investment platform and portfolio management capabilities. The model portfolio will provide access to existing BlackRock and Partners Group funds, primarily limited liquidity vehicles across the core private market asset types. A joint investment committee will review and manage the portfolio’s positions over time and could also add new funds to the portfolio.
"Pulling it all together is innovative, but everything underlying it is proven," said Joseph DeVico, co-head of U.S. Wealth Advisory, BlackRock. "That’s what’s special about this. 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 feature operating procedures and risk management, including model rebalancing and private markets asset allocation. 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 equity and infrastructure funds.
"By pressing one button, you get immediate access to world-class content and world-class professional management. It is a simple, best quality, powerful and scalable solution. We are calling it an iPhone moment for us," added Robert Collins, co-head of 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 down the line but anticipates the liquidity mechanism will be similar to how typical semi-liquid funds work with monthly or quarterly subscription and redemption cadences.
The partnership is the latest in a broader trend of asset managers teaming up to develop alternative investment products for the wealth market. Another recent example is Capital Group Companies, which formed a joint venture with KKR in May to develop new public/private hybrid 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 work with Chicago-based GeoWealth to offer private equity and debt funds in customized portfolios for financial advisers
The adoption of alternative investments in the wealth channel has increased. According to data from investment banking firm Robert A. Stanger & Co., alternative investment fundraising by retail investors is on pace to reach $115 billion in 2024 in limited-liquidity products alone, including non-traded REITs, interval funds and business development companies.
Usage of model portfolios is also rising, an area that Blackrock has projected could grow to $10 trillion in the next five years. In addition, a recent study from Cerulli of asset managers and third-party model providers found that 30% of model portfolios’ 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 also recently published a joint white paper on private markets.
