- Blackstone’s private wealth division has quadrupled its assets to $220 billion in less than five years.
- Asset managers are desperate to reach high net worth clients with few alternative investments.
- Blackstone’s Joan Solotar explains how she grew her unit and shares which funds are on the radar.
Four years ago at Blackstone’s Investor Day, senior managing director Joan Solotar declared that the asset manager’s private wealth business could grow from $58 billion to $250 billion within 10 years. .
Today, her Private Wealth Solutions division oversees $220 billion in assets, representing nearly a quarter of Blackstone’s total assets, well ahead of schedule. When Blackstone went public in 2007 with about $88 billion in assets, less than 5% belonged to private property, and that came from her friends and family, according to Solotar.
Today, the division attracts global high net worth individuals to its funds through wealth managers, private banks and family offices. The unit will have just under 300 employees from his 160 in fall 2021, with a presence in Asia and Europe.
The growth in recent years has been driven by several factors, she said in an Insider interview before speaking at this week’s Future Proof conference in Huntington Beach, California. The creation of so-called perpetual funds, which advisors allocate monthly and allow investors’ money to deploy immediately, instead of traditional structures that severely limit when they can enter and when they can exit, she said. . Private market investments have become more accessible to retail investors as funds such as unlisted REITs have cut some fees.
Solotar, Global Head of Private Wealth Solutions, said: “The industry is transforming into a more investor-centric industry.”
Technology has also made it much easier for individual investors to participate in Blackstone funds. Even the advent of electronic signatures is a “game changer” for advisers to allocate from multiple client portfolios, she said.
Advisors have historically under-allocated to alternatives, and Cerulli Associates estimates that 55% of private wealth advisors don’t use them at all. But the economic uncertainty caused by the pandemic has drawn many advisors to Blackstone’s online courses on alternative investments. Over 11,000 advisors are registered.
The current bear market only sustains a strong interest in learning more about the alternatives.
“We certainly see this as an opportunity, given the worst start many advisors have had in their careers, both in equities and fixed income. It provided good returns and low volatility,” Solotar said in an interview at the conference. “It’s important to understand where it can fit alongside equities and bonds, and we’ve seen alternatives move from the sideshow to the main stage.”
Blackstone’s hottest fund for retail investors bets on private credit and rental housing
The Private Wealth Solutions segment has four flagship funds, including BGFLX, a variable rate credit fund, and BXMIX, a multi-strategy mutual fund.
According to Solotar, the two most popular funds today are BCRED, a private credit fund launched in January 2021, and BREIT, a non-trading real estate investment trust. Investors can buy BCRED and BREIT for $2,500, but most of Blackstone’s funding is limited to eligible buyers who invest at least $5 million, Solotar said. I’m here. Both pay dividends and allow investors to redeem their liquidity periodically.
Blackstone is one of the largest rental home owners in the United States, with more than half of its BREIT portfolio made up of rental homes in the South and West. Data and logistics centers closer to urban areas also rank highly, Solotar said.
New products appear one after another as asset managers pursue wealthy clients
Solotar said several new funds are in the works for private wealth solutions. For example, Blackstone filed a registration statement with the SEC in May for its BXPE, a private equity strategy fund.
Many asset managers are targeting private wealth clients. Just two weeks before him, Ares Management hired a managing director from Solotar’s division to lead her EMEA arm of the wealth management division, which was founded a year ago, according to Bloomberg.
Solotar told Insider that Blackstone was the first to track it down, and that just because there’s plenty of white space doesn’t mean all competitors win equally.
“When I was an equity research analyst covering the industry, when company management told me there was more growth prospects because there was all this white space, I was internally stoked. , I thought, “White space just means what you don’t have.” said Solotar, who was head of equity research at Bank of America before joining Blackstone in 2007.
“Just because you say you can be like Blackstone doesn’t mean you can.”
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