#United States #Envestnet #Berwyn #BlackRock #Franklin Templeton

Envestnet Launches New Interval Fund Models for Wealth Management

In a bid to cater to the rising demand for alternative investments, Envestnet, a leader in wealth management technology, has unveiled the launch of professionally managed model portfolios that feature interval funds. This move aims to enhance the accessibility of institutional-quality investments for advisors who serve high-net-worth (HNW) and ultra-high-net-worth (UHNW) clients. With this initiative, Envestnet is embarking on a significant milestone designed to streamline advisor access to various alternative investment opportunities.

New Offerings and Strategic Partnerships

The introduction of these new models is part of Envestnet’s mission to provide advisors with a robust toolkit that features modern, diversified portfolios, especially as public markets become increasingly narrow and private markets drive innovation. Dana D'Auria, Co-CIO and Group President of Envestnet Solutions, emphasized the necessity for advisors to have diverse options to meet the expectations of their affluent clients.

The initial offerings include model portfolios powered by esteemed asset managers, namely Franklin Templeton and BlackRock, slated for release in 2025. Further models from Fidelity Investments and State Street are anticipated to follow in 2026, thereby broadening the available investment strategies for advisors.

Franklin Templeton and BlackRock Models

Envestnet’s model portfolios consist of a combination of strategies designed for varying risk appetites. The Franklin Templeton Multi-Manager High-Net-Worth Portfolios offer five levels of risk, tailored from Conservative to Aggressive profiles, integrating a strategic 10% allocation to alternative investments. This model facilitates enhanced income potential while ensuring easier access to private markets, circumventing the need for cumbersome subscription documents and providing simplified tax reporting.

On the other hand, the BlackRock Multi-Asset Income with Private Markets Models targets a more extensive client base, with a minimum investment of $25,000. These portfolios blend public and private credit alongside dividend-focused equities across three different risk allocations: 40/60, 60/40, and 80/20. Like the Franklin Templeton options, these models emphasize liquidity and easy access to private markets, further addressing common pain points experienced by financial advisors.

Operational Considerations

With the advent of these new models, Envestnet has also outlined essential operational protocols to assist financial advisors. These include:

• - Redemption Windows: Advisors need to monitor the redemption timelines to prevent trading lockups.
• - Fund Gating: Understanding how gates will affect redemption requests is crucial for maintaining liquidity.
• - Rebalancing Constraints: Advisors must consider possible limitations on rebalancing and tax-loss harvesting, which will be restricted to open trading windows.
• - Liquidation Responsibilities: Financial advisors must also manage liquidation responsibilities carefully in the event of account terminations.

The Importance of Alternative Investments

As it stands, more than half of alternative investments are held by high-net-worth and affluent investors, indicating a growing trend among wealth managers to integrate these asset classes into their portfolios. Erik Preus, Group Head of Investment Management at Envestnet, highlighted the critical need to provide expanded capabilities for advisors in response to this demand.

The launch of these innovative models reinforces Envestnet's commitment to enhancing the wealth management landscape, ensuring advisors are well-equipped to serve the increasingly complex needs of their wealthy clients.

Conclusion

Envestnet’s introduction of professionally managed model portfolios featuring interval funds not only marks a pivotal evolution in advisor access to alternative investments but also highlights the collaborative efforts with major asset managers like BlackRock, Franklin Templeton, Fidelity, and State Street. For financial advisors seeking to build diversified and modern portfolios, these new models offer a powerful, practical solution that aligns with the current market dynamics and client expectations. It’s a definitive step forward in optimizing wealth management practices in an ever-evolving financial landscape.