- Blackstone’s private wealth arm has quadrupled in assets to $220 billion in less than five years.
- Asset managers are doing their best to compete for wealthy clients with few alternative investments.
- Blackstone’s Joan Solotar explains how she grew the division and shares which funds are hot.
Four years ago, at Blackstone’s investor day, senior managing director Joan Solotar announced that she could grow the asset manager’s private wealth business from $58 billion under management to $250 billion within a decade.
Now that her Private Wealth Solutions unit manages $220 billion in assets, or about a quarter of Blackstone’s total assets, her work is done ahead of schedule. When Blackstone went public in 2007 with about $88 billion in assets, less than 5 percent of its assets were in private wealth and came from friends and family, according to Solotar.
Now, the unit brings the world’s richest to its funds through wealth managers, private banks and family offices. The division has fewer than 300 employees, up from 160 in fall 2021, and operates in Asia and Europe.
The growth in recent years can be attributed to several factors, she told Insider in an interview before speaking at the Future Proof conference in Huntington Beach, Calif., this week. The biggest push, she said, has been the creation of so-called perpetual funds, which allow advisers to allocate and deploy investors’ money on a monthly basis, rather than traditional structures that strictly limit when investors can participate and exit. Private market investments are also more accessible to retail investors, as funds such as non-trading REITs have reduced some fees.
“Companies are charging acquisition fees, disposal fees, and individuals have a bad experience,” said Solotar, global head of private wealth solutions. “The industry has really transformed to be more investor-centric.”
Technology has also made it easier for individual investors to participate in Blackstone funds. Even the advent of electronic signatures has changed the game, she said, allowing advisors to assign from multiple client portfolios.
Advisors have historically been under-allocated to alternatives, with Cerulli Associates estimating that 55% of private wealth advisors don’t use them at all. But the economic uncertainty brought on by the pandemic has also attracted many advisers to take Blackstone’s online course on alternative investing. Over 11,000 consultants have registered.
The current bear market has simply maintained a keen interest in learning more about alternatives.
“I certainly see this as an opportunity because we’re off to the worst year many advisors have seen in their entire careers in equities and fixed income, and over time the alternatives offer better returns and is less volatile,” Solotar said in an interview at the conference. “It’s important to figure out where they can sit alongside stocks and bonds, and we’ve seen alternatives move from sideshow to main stage.”
Blackstone’s hottest retail investment fund bets on private credit and rental housing
The Private Wealth Solutions segment has four flagship funds, including floating rate credit fund BGFLX and multi-strategy mutual fund BXMIX.
According to Solotar, the two most popular funds are private credit fund BCRED and non-trading REIT BREIT, which launched in January 2021. Solotar said investors can buy BCRED and BREIT for $2,500, while most of Blackstone’s funding is limited to qualified buyers who invest at least $5 million. Both pay dividends and investors can redeem liquidity on a regular basis – as soon as monthly via BREIT.
Blackstone Group is one of the largest rental home owners in the United States, and more than half of BREIT’s portfolio includes rental properties in the South and West. Data and logistics centers close to urban areas also rank high, Solotar said.
New products in the pipeline as asset managers chase wealthy clients
Some new funds are working on private wealth solutions, Solotar said. For example, Blackstone filed a registration statement with the SEC in May for private equity strategy fund BXPE.
Many asset managers are serving private wealth clients. Just two weeks ago, Ares Management hired a managing director from Solotar’s unit to run the EMEA arm of its one-year-old wealth management unit, Bloomberg reported.
Solotar told Insider that Blackstone was the first to be chased, and that the massive void doesn’t mean all competitors have an equal chance.
“When I was an equity research analyst and covered the industry, when company management told me they had more growth prospects because they had all this white space, I thought internally, ‘white space just means Something 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’ll be like Blackrock, doesn’t mean you can.”