Produced in partnership with BlackRock Australia.
BlackRock views personalisation, private markets, and access to public markets as three core portfolio trends that will shape advice in the near future.
Katie Petering, BlackRock Australasia head of investment strategy, multi-asset strategies and solutions group, said people crave personalisation in every part of their lives and investments will be no exception.
“One way to get personalisation into investments [is through] managed accounts,” Petering told the BlackRock 2025 Wealth Symposium last week in Sydney.
“In the US, which is the largest market for managed accounts, we’ve seen a 61 per cent increase in personalised index SMAs [separately managed accounts] and that trend is very much onshore here in Australia as well,” she said, referring to the asset managers Evolving wealth ecosystem. An asset manager’s perspective report.
According to the Institute of Managed Account Professionals census data, managed accounts funds under management has grown 52 per cent since 2020, as of 2 October 2024.
“Significant growth in the market, significant flows and support, high adoption from advisers,” Petering said.
“If you look at how the market has evolved, about half the market is tailored or bespoke or personalised managed accounts.”
Petering said the interesting trend is the adoption rate of managed accounts in Australia has plateaued over the last couple of years to about 56 per cent of adoption, referring to the SPDR ETFs/Investment Trends 2024 Managed Accounts Report.
“The reason we think that adoption rate is flattening is because there’s been a bit of a gap in the market between off the shelf managed accounts and highly tailored managed accounts,” Petering said.
“There needs to be innovation and investment in technology to fill that gap so that more advisers can get customisation at scale to their clients who are demanding personalisation.”
Private versus public markets
When it comes to private markets, Petering said it has become a major area of investor demand noting global high net worth and ultra-high net worth investor allocations are up to almost 40 per cent, according to the firm’s Seizing Opportunities in Times of Change report.
“In Australia, we don’t have the same adoption rate at the moment but just in terms of allocation it’s heading to about USD $5.1 trillion to private markets deployed globally,” Petering said, referring to the Morgan Stanley/Oliver Wyman 2021 Competing for Growth Study.
She added the reason for this trend is the “rapid evolution” of technology.
“Again, technology is needed to unlock this important asset class for wealth investors,” Petering said.
“In terms of rapid evolution, we’re seeing in the UK we have vehicles that are highly regulated…diversified portfolios of illiquid alternatives blended with liquid alternatives in order to allow and enable access from wealth investors into those markets.”
Petering said this evolution is growing throughout Europe as well.
“There’s a lot of platforms now that have invested into technology to unlock the frictions for investing in private assets,” Petering said.
Petering said access to public markets was through ETFs which have now achieved mainstream status.
“In the US, there’s been a significant launch of active ETFs as well as here in Australia,” Petering said.
Petering said the main component of the active ETF market is alpha-seeking ETFs. “These are ETFs where portfolio managers are aiming to outperform certain benchmarks,” she said.
Industry trends
BlackRock Australasia head of strategic partnerships Paula Gigler said the biggest trend in global wealth is consolidation and the global asset manager expects this trend to continue.
“In Australia, if you count the top five licensees they now control about $220 billion in Australia and so we’re seeing this theme start to play out again with recent news through different parts of value chain in wealth at the moment,” she said, referring to the firm’s Australian advisory firm consolidation data, as of December 2024.
The reason clients are doing this is because it’s the best way to achieve scale, according to Gigler.
“If you think about your business and where you sit in the wealth market today and who you’re using across private markets, asset allocation, manager selection, technology, marketing and branding, whatever your business services looks like we’re seeing that clients are starting to look for partners to do more with fewer,” Gigler said.
“This is to reduce to operation complexity of their business and to have a higher bargaining power. If you sit at the table and you’re asking a supplier for 10 services as opposed to one, it’s a very different conversation. Again, it’s driven about this need for scale.”
