- Blackstone’s private wealth arm has quadrupled its assets to $220 billion in less than five years.
- Asset managers are scrambling to compete for wealthy clients who have few alternative investments.
- Blackstone’s Joanne Solotar explains how she grew the room and shares which funds are hot.
At Blackstone’s Investor Day four years ago, Senior Managing Director Joanne Solotar announced that she would grow the wealth manager’s private wealth business from $58 billion under management to $250 billion within a decade.
Now she’s running ahead of schedule, overseeing a quarter of Blackstone’s private wealth solutions arm, which oversees $220 billion in assets. In the year In 2007, when Blackstone went public with $88 billion in assets, less than 5% of the wealth was personal and came from friends and family, Solotar said.
Now the dividend brings the world’s wealthy into the money through wealth managers, private banks and family offices. The division has fewer than 300 employees, up from 160 by the end of 2021, and is located in Asia and Europe.
The growth in recent years can be attributed to a number of factors, she told Insider in an interview before speaking at the Future Proof conference in Huntington Beach, California this week. The biggest driver, she says, is the creation of so-called sustainable funds that allow advisors to allocate monthly and deploy investors’ money immediately, rather than traditional structures that strictly limit when investors participate and exit. Private market investing has become more accessible to retail investors as funds such as non-traded REITs have lost some fees.
“Companies were collecting acquisition fees, executive fees, and the experience for individuals was not good,” said Solothar, global head of Private Wealth Solutions. “The industry is very investor-centric.”
Technology has made it much easier for individual investors to participate in Blackstone funds. Even the arrival of the e-signature was a “game-changer”, she said, to allocate advisers from many client portfolios.
Advisors have historically not been assigned to options, Cerulli Associates estimates that 55% of private wealth advisors never use them. But the economic uncertainty stemming from the pandemic has drawn many advisors to Blackstone’s online courses in alternative investing. More than 11,000 consultants are registered.
The current bear market has only sustained a strong interest in learning more about options.
“I definitely think that’s an opportunity because we’ve had the worst start to the year in equities and fixed income that many advisors have seen in their entire careers and options have delivered better returns over time and are less volatile.” Solotar said in an interview at the conference. “It’s important to know where you fit in with stocks and bonds and we’ve seen options move from the sidelines to the main stage.”
For retail investors, Blackstone’s hottest funds deal in personal loans and rental properties.
The Private Wealth Solutions division has four core funds including BGFLX, a floating credit fund and BXMIX, a multi-strategy mutual fund.
Currently, the two most popular funds are BCRED, a private credit fund that will launch in January 2021, and BREIT, a non-traded real estate investment trust, Solotar said. Investors can buy BCRED and BREIT for $2,500, but most of Blackstone’s money is restricted to qualified buyers, Solotar said. Both pay dividends, and investors can withdraw liquidity regularly – just like every month from BREIT.
Blackstone is one of the largest owners of rental properties in the US, and more than half of BREIT’s portfolio includes rental properties in the South and West. Information and logistics centers near cities are also at a premium, Solotar said.
New products are on the way as asset managers chase affluent clients.
A few new funds are in the pipeline for private wealth solutions, Solothar said. For example, Blackstone filed a registration statement with the SEC in May for the BXPE private equity strategy fund.
Many asset managers are making plays for private wealth clients. Just two weeks ago, Ares Management hired a managing director from Solotar Division.
Solotar told Insider he was originally going to chase Blackstone, and that more white space doesn’t mean all competitors have an equal shot.
“When I was an equity research analyst covering the industry, when I was told by strong managements that had all this white space that they had a lot of growth opportunities, I thought to myself, ‘White space is 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 can be like Blackstone doesn’t mean you can.”
