BlackRock Expands into Private-Markets Investing with New Partnership
BlackRock Inc. is making a strategic move to broaden its offerings in private-markets investing by partnering with GeoWealth, a Chicago-based financial technology and turnkey asset management firm. This partnership will allow BlackRock to incorporate private equity and debt funds into customized portfolios for financial advisers serving wealthy US retail clients. With GeoWealth overseeing approximately $28 billion across 180,000 accounts and 200 registered investment advisers, this collaboration opens up new opportunities in the private markets space.
Expanding Access to Private Markets
By including private assets in model portfolios, BlackRock aims to provide broader access to one of the most sought-after asset classes in today’s market. Eve Cout, head of portfolio design and solutions for BlackRock’s US wealth advisory business, sees the US wealth market as a significant growth opportunity for the firm. In 2023, the US wealth market contributed approximately $4.5 billion in revenue, accounting for a quarter of BlackRock’s total revenue.
Growth in Model Portfolio Business
BlackRock anticipates substantial growth in the model portfolio business, with assets expected to double to $10 trillion over the next five years. Currently, BlackRock manages about $125 billion in model portfolios for US clients, with customized portfolios attracting $31 billion in new assets over the past four years. This expansion reflects the company’s strategic shift towards offering a comprehensive range of investment options beyond traditional ETFs and mutual funds.
Increasing Capabilities in Private Assets
While BlackRock has been a dominant player in low-cost passive funds, the firm is now focused on enhancing its capabilities in private assets. As of April, BlackRock’s retail private debt fund held approximately $498 million in assets, with the retail private equity fund managing around $231 million. This strategy aligns with the company’s goal of becoming a one-stop shop for clients seeking diversified investment opportunities.
Competing in the Retail Wealth Market
With $10.5 trillion in assets under management as of March, BlackRock is increasingly competing with private equity giants like Blackstone Inc., KKR & Co., and Apollo Global Management Inc. These firms are also looking to expand their presence in the retail wealth market, highlighting the growing demand for private-market investments among investors.
Overall, BlackRock’s collaboration with GeoWealth and its focus on private-markets investing reflect the firm’s commitment to meeting the evolving needs of wealth advisers and their clients. By offering innovative solutions and expanding its product offerings, BlackRock is poised to capture new opportunities in the dynamic investment landscape.
