Fund Managers Innovate to Unlock Retail Access to Private Markets 

Martin Small, chief financial officer of BlackRock, said creating a single managed account to provide access to private markets for financial advisors and their clients will be a “huge unlock.”Retail wealth investors allocated $2.3 trillion to private markets in 2020 and are expected to increase their allocations to $5.1 trillion by 2025 according to a Morgan Stanley/Oliver Wyman Study. BlackRock expects managed model portfolios to roughly double in assets under management over the next five years, growing into a $10 trillion business.Source: BlackRockSmall spoke about the asset manager’s aims to help wealth managers build long-term portfolios that blend public and private markets on BlackRocks’ results call on 15 January. He highlighted that wealth manager and retail allocations to private markets are currently in the low single-digits according to recent data from Cerulli Associates.“We are focused on innovating to provide better access to private markets for wealth managers and retail investors across taxable and non-taxable accounts, and retirement accounts,” Small added.In September 2024 BlackRock established a strategic partnership with private assets manager Partners Group to launch a model portfolio solution which provides access to private equity, private credit and real assets in a single portfolio, which is currently not available to the US wealth market. BlackRock’s alternatives team and whole portfolio capabilities powered by its technology platform, Aladdin, will be combined with Partners Group’s investment platform and portfolio management capabilities.Steffen Meister, Partners GroupSteffen Meister, executive chairman of Partners Group, said in a statement: “This separately managed account solution has the potential to revolutionize the wealth management industry, setting a new benchmark for institutional-quality programs that meet wealth investors’ private markets portfolio needs.”Small continued that creating model portfolios with different risk tolerances that blend public and private assets and that manage the cashflows on a single subscription will be a “huge unlock.”  One of the barriers to adoption of private markets with wealth managers is the operational burden of managing multiple subscription documents, cashflows and distributions.“We think a managed account can do that better and increase access,” Small added.In contrast to the US, BlackRock launched an ‘evergreen’ private markets platform for wealth investors in Europe under the region’s Long-Term Investment Fund (ELTIF) 2.0 structure, with initial funds in private equity and multi-alternatives. BlackRock also wants to launch evergreen funds in infrastructure and private credit. Small said Blackrock is looking at bringing similar evergreen structures to the US.Partners Group launched the first US private equity evergreen fund in 2009, which is currently the largest in the market at $15.5bn. As of 30 June 2024, evergreen funds accou