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BlackRock is launching a new suite of funds for wealthy individuals to access its private markets products, the latest sign that the world’s largest money manager is betting on the central importance of alternative assets to its future.
The new service will give people in Europe, the Middle East and Asia Pacific, investing at least €10,000, access to BlackRock’s private equity, private debt, infrastructure, real estate and other private market products.
The launch comes as the giant of passive investing is spending billions to elbow its way into alternatives: a fast-growing sector that carries much higher fees.
“We see private markets as a huge component of BlackRock’s offering, as clients seek help to build better portfolios that benefit from enhanced returns and diversification,” said Stephen Cohen, chief product officer of BlackRock.
“If I think about investment strategies, public and privates are coming together to offer clients solutions across the whole portfolio.”
He added that the latest launch was an attempt to address challenges the private markets industry has historically faced in offering products to individual clients, such as limited liquidity.
Earlier this month BlackRock, which manages $11.5tn in assets, agreed to pay more than $12bn to acquire private credit manager HPS Investment Partners, and in October it completed the $12.5bn purchase of infrastructure investment firm Global Infrastructure Partners (GIP).
BlackRock has also agreed a deal to purchase Preqin, a UK private markets data group, for £2.55bn.
The asset manager already offers model portfolios that allow advisers to distribute individual customers’ money across public markets.
Its new suite of funds will initially include BlackRock’s private equity fund, which “co-invests” in companies alongside other buyout fund managers and purchases stakes in private equity funds from other investors.
Eventually it will also offer clients the chance to invest in BlackRock’s GIP infrastructure portfolio, Cohen said.
He added that, although he could not comment on whether HPS would be included because the acquisition had not yet completed, “the principle is to be able to take all of the broader investment capabilities that will come together in BlackRock’s private markets platform and be able to deliver those” to retail customers.
Clients could expect their money to be held in the “evergreen” portfolio, which has no end date, for an initial two-year period, before being able to exit their positions gradually every quarter, Cohen added.
Several marquee private markets firms have recently teamed up with traditional asset managers to create new ways for wealthy individuals to access their products, as the industry competes for new funds against a backdrop of tougher conditions for raising money from their traditional institutional investors, such as pension funds.
BlackRock and Swiss private markets firm Partners Group struck a deal earlier this year to offer a bundle of alternatives products to clients of financial advisers and wealth managers in the US.
KKR and Capital Group filed with the US Securities and Exchange Commission in October for permission to sell public-private debt funds to retail investors, and Apollo and State Street joined forces in September to seek permission to launch an exchange traded fund that invests in both public and private credit.
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