BlackRock has launched the Expected Return Analyzer, an portfolio analysis tool, to help advisers allocate to private markets. Powered by BlackRock’s Aladdin technology, the Expected Return Analyzer draws on the BlackRock Investment Institute’s proprietary Capital Market Assumptions to show advisers how adding private markets or other asset class exposures to their client’s portfolios can help meet their return targets.
The new tool is part of BlackRock’s commitment to increasing accessibility to alternative investments and helping advisers 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 adviser portfolio is about 25 percent more volatile than it was a year ago, even though it has retained the same 60/40 stock/bond split.
“In today’s low rate world, there is a mismatch between investors’ return expectations and their exposure to private markets,” says Scott Reeder, Head of the Alternative Investment team in BlackRock’s US 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 percent today to 20 percent over the next several years.”
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