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BlackRock and Partners Group have struck a deal to offer model portfolios containing private equity, private credit and real estate funds in the latest effort by big money managers to sell alternative assets to rich individuals.
The tie-up is aimed at giving financial advisers and wealth managers a simple way of selling a bundle of alternative products to their retail clients.
Swiss-based Partners has been running “evergreen” funds, which generally work better for smaller investors than those with end dates, since 2009.
BlackRock, the world’s largest money manager with $10.6tn in assets, already offers an extensive array of model portfolios that allow advisers to distribute individual customers’ money across public markets.
The new model portfolios will contain both BlackRock and Partners funds.
US-based BlackRock has been moving quickly to grow in private markets in recent months, announcing the $12.5bn acquisition of Global Infrastructure Partners as well as the purchase of Preqin, the private markets data provider.
Overall, its products for wealth advisers made up 25 per cent of revenues last year.
The deal is the third big tie-up aimed at tapping retail demand for alternatives since May. KKR and Capital Group announced a partnership to sell public-private debt funds in May, and Apollo and State Street combined forces earlier this week to launch an exchange traded fund that invests in both public and private credit.
Traditional money managers and firms that specialise in private assets are all scrambling to offer alternative assets to retail customers as they seek new sources of growth.
The private fund managers are looking to reach beyond their traditional base of pension funds, endowments and sovereign wealth funds, while asset managers with experience selling products for individuals, want to keep their customers and like the higher fees that private assets bring.
“It’s really started to heat up,” said David Layton, chief executive of Partners Group, which has one-third of its $149bn in assets in semi-liquid funds. “Not only is there an opportunity present but our peers are taking this very product-oriented approach with armies of salespeople.”
Cerulli Associates, a consultancy, has estimated that financial advisers will boost holdings of alternative investments such as private credit from $1.4tn to $2.5tn by the end of 2025.
Partners and BlackRock have been talking about working together for two years, but finally decided to make a push on offering packages of private asset funds earlier this year.
“We are giving institutional-quality exposures packaged in digestible chunks that fit the way advisers buy and build portfolios today,” said Mark Wiedman, head of BlackRock’s global client business.