BlackRock Launches New Tool to Help Advisors Allocate to Private Markets

Rhea-AI Summary

BlackRock has launched the Expected Return Analyzer, a new portfolio analysis tool designed for financial advisors to enhance client investment strategies. Powered by BlackRock's Aladdin technology, this tool utilizes proprietary Capital Market Assumptions to evaluate how including private market exposures could improve client returns. A recent BlackRock study highlighted that traditional portfolios may fall short of past returns, advocating for increased allocations to private markets from 5% to 20% over several years. The tool aligns with BlackRock’s commitment to making alternative investments more accessible.

Positive

• Launch of Expected Return Analyzer tool to enhance portfolio analysis.
• Tool aims to support advisors in integrating private markets into client portfolios.
• Study indicates traditional portfolios risk underperforming, supporting demand for alternatives.

Negative

• Traditional 60/40 portfolios are facing increased volatility, potentially exposing investors to higher risks.

NEW YORK--(BUSINESS WIRE)-- With interest rates near record lows and stock market valuations near record highs, many advisors are looking to private markets to diversify and potentially amplify returns for their clients. BlackRock has launched the Expected Return Analyzer, an innovative portfolio analysis tool, to help advisors meet that need. Powered by BlackRock’s Aladdin® technology, the Expected Return Analyzer draws on the BlackRock Investment Institute’s proprietary Capital Market Assumptions to show advisors how adding private markets or other asset class exposures to their clients’ portfolios can help meet their return targets.

The new tool is part of BlackRock’s commitment to increasing accessibility to alternative investments and helping advisors better understand the role alternatives can play in wealth portfolios to address their clients’ needs.

A BlackRock study indicates that the traditional 60/40 portfolio will not only fall short of the moderate returns of the past but may increase investment risk as well. In fact, the study showed that the average advisor portfolio is about 25% more volatile than it was a year ago, even though it has retained the same 60/40 stock/bond split.¹

“In today’s low rate world, there is a mismatch between investors’ return expectations and their exposure to private markets,” said Scott Reeder, Head of the Alternative Investment team in BlackRock’s U.S. Wealth Advisory business. “With volatile equity markets and bond yields near record lows, alternatives can have an increasingly important role to play as clients look to enhance returns, reduce risk and build portfolio resilience. We believe that the allocation to private markets in wealth portfolios should increase from 5% today to 20% over the next several years.²”

Moving from Problem to Plan

Advisors can help optimize their clients’ portfolio by uploading it into the Expected Return Analyzer. Within seconds, they can see how the portfolio stacks up against targeted return expectations. Based on those results and the advisors’ inputs, the tool suggests alternative exposures that can help meet their needs based on asset allocation, projected performance and volatility. Once a proposed portfolio is selected, advisors can use the Expected Return Analyzer to model how different alternative portfolio allocations can help meet their clients’ investment goals.

The Expected Return Analyzer adds to the suite of tools found on BlackRock’s Advisor Center, which leverages BlackRock’s portfolio construction tools and analysis to help advisors build more resilient portfolios. Individual investors that want to think beyond a traditional 60/40 portfolio should contact their advisor to learn how adding an allocation to private investments can help their portfolio.

About BlackRock

BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, we help millions of people build savings that serve them throughout their lives by making investing easier and more affordable. For additional information on BlackRock, please visit www.blackrock.com/corporate | Twitter: @blackrock | LinkedIn: www.linkedin.com/company/blackrock

The Expected Return Analyzer tool is for financial professional use only.

IMPORTANT: The projections or other information generated by the tools regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.

Investing involves risk, including possible loss of principal.

Alternative investments may engage in speculative investment practices which increase investment risk, can be highly illiquid, often are not required to provide periodic prices or valuation, may not be subject to the same regulatory requirements as mutual funds and often employ complex tax structures. Also, some alternative investments have experienced periods of extreme volatility.

This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.

The tools, and any data used by the tools, are provided on an "as-is" basis. BlackRock expressly disclaims all warranties, express or implied, statutory or otherwise with respect to the tool (and any data used by the tool and the results obtained from use of the tool) including, without limitation, all warranties or merchantability, fitness for a particular purpose or use, accuracy, completeness, originality and/or non-infringement. In no event shall BlackRock have any liability for any claims, damages, obligations, liabilities or losses relating to the tool including, without limitation, any liability for any direct, indirect, special, incidental, punitive and/or consequential damages (including loss of profits or principal).

Prepared by BlackRock Investments, LLC, member FINRA.

BlackRock Fund Advisors, an affiliate of BlackRock Investments, LLC, is a registered investment adviser.

©2021 BlackRock, Inc. BLACKROCK and ALADDIN are trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.

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¹ Source: BlackRock, Aladdin. January 2021. Advisor Insights Guide by BlackRock Portfolio Solutions. Study contains unique data and insights on 20,108 advisor portfolios.
² Source: BlackRock, “An alternative journey.” December 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210930005068/en/

Media Contact

Paige Hofman

Paige.hofman@blackrock.com

212-810-3368

Source: BlackRock

FAQ

What is the Expected Return Analyzer tool launched by BlackRock?

The Expected Return Analyzer is a portfolio analysis tool that helps financial advisors assess how to enhance client returns by integrating private market assets.

How does the Expected Return Analyzer benefit advisors and clients?

It allows advisors to optimize client portfolios by suggesting alternative asset allocations based on return expectations and risk assessments.

What change in portfolio structure does BlackRock recommend?

BlackRock suggests increasing allocations to private markets from 5% to 20% over the coming years to improve returns.

What concerns does BlackRock raise about traditional investment portfolios?

BlackRock's study shows that traditional 60/40 portfolios may underperform and have become 25% more volatile compared to the previous year.

What technology powers BlackRock's Expected Return Analyzer?

The tool is powered by BlackRock's Aladdin technology, utilizing proprietary market assumptions for analysis.