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In his most recent letter to investors, BlackRock CEO Larry Fink discussed the company’s latest investment strategies and where he envisions the future of investing heading.
One of the most significant developments came in his prediction around portfolio splits, noting that “the classic 60/40 portfolio may no longer fully represent true diversification.”
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He believes there is a better standard portfolio coming soon — the 50/30/20 split high-income investors already prioritize, which includes “stocks, bonds, and private assets like real estate, infrastructure, and private credit.”
Fink says BlackRock’s current goal is to bring private asset investments to the masses, freeing these investments from the gatekeeping that has allowed only the wealthiest access.
“Assets that will define the future — data centers, ports, power grids, the world’s fastest-growing private companies — aren’t available to most investors,” Fink wrote. “They’re in private markets, locked behind high walls, with gates that open only for the wealthiest or largest market participants.”
Recently, BlackRock has acquired Global Infrastructure Partners, Preqin and HPS Investment Partners, a strategy meant to increase the average investor’s access to the traditionally out-of-reach private market — just as they did for ETFs on acquiring iShares.
“Private markets don’t have to be as risky. Or opaque. Or out of reach. Not if the investment industry is willing to innovate,” Fink continued.
BlackRock’s recent acquisitions underscore Fink’s advice against the 60/40 stock-bond portfolio split. The 50/30/20 split means 20% of a person’s investments are in private assets, which could be good for BlackRock’s business as they move in this new private asset-focused direction.
What does this mean for you?
If the democratization of assets previously reserved for the wealthy and a 50/30/20 split sounds appealing to you, there are options that allow you to increase your investment in private assets like real estate right away.
Mogul is a real estate investment platform offering fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 A.M. tenant calls.
Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide, guided by proprietary underwriting and market analytics typically used by large institutions.
Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10 to 12% annually.
Every investment is secured by real assets, not dependent on the platform’s viability. Each property is held in a standalone Propco LLC, so investors own the property — not the platform. Blockchain-based fractionalization adds a layer of safety, ensuring a permanent, verifiable record of each stake.
Getting started is a quick and easy process. With a minimum investment of $250, you can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest in the properties of your choice in as little as 30 seconds.
But as alternative assets become increasingly accessible, there are also ways to put more of your money into this sector. Accredited investors could consider commercial real estate to further diversify their portfolios.
For years, direct access to this $22.5 trillion commercial real estate sector has been limited to a select group of elite investors, but First National Realty Partners (FNRP) has changed that.
FNRP allows accredited investors to diversify their portfolio through grocery-anchored commercial properties, minus the stress of being a commercial landlord.
With a minimum investment of $50,000, you can own a share of properties leased by commercial brands like Whole Foods, Kroger and Walmart and other grocers serving the local community.
Just answer a few quick questions about your investment preferences to start browsing their complete list of available properties today.
Gold is another private investment that has become increasingly popular over the past few months, reaching an all-time high of $3,534 on August 8.
A gold IRA is one option for building up your retirement fund with an inflation-hedging asset.
Opening a gold IRA with the help of Goldco allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.
With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.
If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.
Read more: Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
Why 60/40 could still be ideal for many
Some advisors are not as comfortable as Fink is with the 50/30/20 split for the average investor.
Amy Arnott, portfolio strategist at Morningstar, told CNBC that a 20% allocation in private assets is still considered aggressive.
“If you want to keep things very simple, the 60/40 portfolio or a target date fund is a great starting point,” Arnott said.
She noted that the total value of private assets globally is only “about $14.3 trillion, while the public markets are worth about $247 trillion,” which means private assets account for just 6% of the market — not 20%.
If you’re not sure what split you should be investing in, you might want to speak with a financial advisor to help give you peace of mind.
Advisor.com can help match you with an advisor to find the right portfolio mix for you. Since their advisors are legally obligated to act in your best interest, you know your money is in good hands.
Just answer a few quick questions about yourself, and Advisor.com will match you with a vetted financial advisor who can walk you through your portfolio options.
From here, you can book a free, no-obligation call today to find the best advisor for you.
If your household income is above $300,000, you might also consider a wealth management team like Range to help you figure out all the possible options.
Range’s all-in-one wealth management platform offers modern investing advice — with no hidden fees.
Traditional advisors typically charge 0.5-2% AUM fees, but Range’s flat-fee pricing with 0% AUM fees offers comprehensive plans at a fraction of the cost of traditional advisors.
Range’s clients receive 24/7 expert advice and personalized strategies, allowing for complete portfolio customization alongside full wealth management — including complex tax management, equity compensation and estate planning.
Book a free demo with the Range team today to find out more.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.