Envestnet Enhances Accessibility to Alternative Investments Through Innovative Model Portfolios

Envestnet Expands Access to Alternatives

Envestnet, a prominent leader in integrated technology, intelligent data, and wealth solutions, has rolled out a transformative upgrade to its alternative investment functionality. This new capability features professionally managed model portfolios that include semi-liquid alternative allocations and alternative ETFs, developed hand in hand with some of the most respected names in asset management, such as BlackRock, Fidelity Investments, Franklin Templeton, and State Street Global Advisors. This initiative is crucial in democratizing access to alternative investments, allowing financial advisors to craft modern, personalized portfolios that align with current market conditions.

The Changing Landscape of Investments

The investment landscape has experienced a significant transformation, most notably reflected in the decreased number of publicly traded companies, which shrunk from approximately 8,800 in the mid-1990s to around 5,400 today. Consequently, more value creation is occurring in the private markets. This shift underscores the necessity for investors to access non-traditional assets, offering a vital pathway toward diversification and long-term portfolio growth outside the traditional 60/40 stock-bond framework.

As Dana D'Auria, Group President of Envestnet Solutions and Co-Chief Investment Officer at Envestnet, expresses: "As innovation and growth continue to shift to the private markets, advisors need access to a broader set of tools to deliver truly diversified portfolios." He highlights how alternative investments, encompassing areas like real estate, infrastructure, private equity, private credit, and hedge funds, not only yield unique returns but also present the potential for higher yields and reduced correlation with traditional assets.

A Modernized Approach to Alternatives

In response to the increasing demand for alternative investments, Envestnet aims to integrate these options seamlessly and flexibly into client portfolios. The company is introducing professionally managed model portfolio strategies with allocations to semi-liquid alternatives and alternative ETFs in collaboration with their strategic partners. This modernized approach enables advisors to provide their clients with improved diversification, income generation, and long-term growth potential while simplifying operational considerations.

Eve Cout, Head of Solutions for BlackRock's U.S. Wealth Business, notes the essential requirements from advisers: "Clients are seeking portfolios that generate income from non-traditional sources, they want easier access to private markets, and they aim to personalize with separately managed accounts." With BlackRock's portfolio construction expertise supported on Envestnet's platform, advisors are poised to redefine income solutions to meet contemporary client demands.

Jordan Burgess, head of Wealth Advisory Managed Solutions at Fidelity Investments, emphasizes that Fidelity has taken the lead in building customizable portfolio solutions at scale. Through the strategic relationship with Envestnet, they provide open-architecture custom model portfolios designed for eligible wealth management firms with exposure to private markets, back by Fidelity's robust institutional research.

Seamless Integration and Accessibility

Forthcoming enhancements to Envestnet’s UMA platform—including the allocation to Interval Funds—are targeted for the end of 2025. Advisors will now have the capability to integrate alternative investments directly into managed portfolios through either advisor-traded sleeves or fully managed models featuring semi-liquid strategies.

Envestnet has a long history of pioneering sophisticated investment solutions tailored for advisors, having integrated CAIS into its Tamarac platform in 2016 to facilitate access to alternative strategies. The platform continues to expand, evidenced by the incorporation of iCapital in 2022 for enhanced reporting capabilities surrounding illiquid alternatives, and ongoing partnerships have enabled aggregating substantial alternative investments along with optimizing advisors' workflows.

In a statement from Aaron Bauer, Head of Strategic Partnerships at Envestnet: "We’re committed to making alternatives more accessible than ever. We are strengthening our alternative investment infrastructure and capabilities by integrating with leading asset management partners to broaden the range of alternative investment data available to advisors across our platform. Our goal is to empower more advisors with institutional-grade solutions while ensuring simplicity in execution."

Envestnet continues to evolve and prioritize advisor efficiency, transparency, and scalability through its partnerships, thereby enabling advisors to better serve clients by providing comprehensive insights and automated tracking of alternative investments.

Conclusion

Envestnet's expanded access to alternatives is not just a developmental milestone; it symbolizes the company’s commitment to reshaping the wealth management landscape. By delivering diverse investment options and facilitating greater accessibility through institutional-grade resources, Envestnet is empowering advisors with the tools needed to navigate today's dynamic market intricacies confidently. As the demand for customized financial portfolios continues to rise, Envestnet is at the forefront, leading the transformation in financial advisory services and investment strategies.

For more information, visit Envestnet's website.