With clients increasingly interested in private assets, including credit, equity and other forms of alternative investments, there’s been a commiserate rise in demand for access to those segments. Advisors know as much and they’re looking for ways to respond.
Fidelity Investments is making that task easier with Fidelity Custom Model Portfolios, which allow eligible registered investment advisors (RIAs) and broker-dealers (BDs) to leverage the efficiencies of model portfolios to enhance client access to private assets.
Obviously, Fidelity is a trusted name in the wealth management community and it’s steeped in experience when it comes to managing alternative assets. It currently custodies more than $95 billion in assets under administration across 6,000 proprietary and third-party alternative products.
“In addition, Fidelity, through its asset management divisions, manages a range of alternative investment (alts) vehicles, including private equity, private credit, real assets, liquid alternatives, and digital assets,” according to a statement. “Fidelity Investments' alts lineup includes more than 60 funds, comprised of funds for eligible investors and funds available to the firm's investment team for portfolio construction, totaling more than $41 billion in assets under management. ”
Model Portfolios Make Sense for Alts, Private Markets Access
Indeed, the number of mainstream avenues through advisors and investor can tap into private credit and equity is increasing, but this is also a realm in which model portfolios could benefit advisors and clients alike.
Model portfolios are fast becoming growth drivers for companies such as validity, but there’s benefit in this form of asset allocation for advisors and wealth managers. Importantly, research confirms that model portfolios don’t chase clients away. Actually, various surveys indicate clients will stick with advisors deploying model portfolios and prospects are apt to give advisors their business when model portfolios are on the table.
Bottom line: model portfolios can create considerable efficiencies for advisors and in the worlds of alts and private markets, truly make life easier by reducing time allocated to research and securities selection.
“Fidelity Institutional Wealth Adviser LLC (FIWA), which oversees portfolio construction for the custom models, includes an experienced, specialized alternative investment manager research team,” added Fidelity in the statement. “The team applies quantitative and qualitative analysis and a rigorous due diligence process to identify managers in which they have high conviction. FIWA’s systematic portfolio construction process also leverages proprietary research and insights from across Fidelity to create portfolios to help investors reach their long-term objectives. ”
Other Perks of Fidelity Private Market MPs
For many advisors, one of the biggest sticking points as it relates to adoption of model portfolios is that the advisor doesn’t want to relinquish control of the investment evaluation process. Many simply like securities and research and it’s one of the primary reasons many get into the business.
With that in mind, Fidelity Custom Model Portfolios may be appealing to advisors because there’s room for advisors to “tinker” and customize what’s put in front of clients.
“Financial advisors who prefer a more hands-on approach have access to portfolio construction solutions such as Fidelity’s Portfolio Quick Check tool or consulting a portfolio construction specialist,” concludes the asset manager.