BlackRock to fully acquire SpiderRock Advisors to strengthen SMA capabilities
BlackRock, Inc. (NYSE: BLK), the world’s largest asset manager, announced its agreement to acquire the remaining equity interest in SpiderRock Advisors, a premier provider of customized option overlay strategies in the United States wealth market. This move not only enhances BlackRock’s existing minority stake acquired in 2021 but also significantly bolsters its capabilities in offering personalized separately managed accounts (SMAs) to wealth managers seeking to cater to clients with specific, tax-efficient portfolio needs.
Joe DeVico, Co-Head of BlackRock’s U.S. Wealth Advisory business, highlighted the acquisition’s strategic importance, stating, “By giving BlackRock more SMA capabilities, this acquisition will enable us to meet growing demand from wealth managers for personalized, tax-efficient portfolios. We look forward to fully integrating SRA’s team and capabilities into our U.S. Wealth Advisory business and to further expanding our offerings in SMA solutions.” This integration marks a pivotal step in BlackRock’s ongoing commitment to leading the SMA market, which is anticipated to grow from $2.7 trillion in assets under management (AUM) as of Q3 2023 to $4 trillion by 2026, according to research by Cerulli Associates.
SMAs are gaining traction in the wealth industry, driven by technological advancements and a growing client demand for portfolio customization. This demand encompasses a variety of client needs, including unique tax situations, values-alignment, or specific investment outcomes. SpiderRock Advisors’ suite of services, as Eve Cout, Head of Portfolio Design & Solutions pillar within BlackRock’s U.S. Wealth Advisory business, explains, is “highly complementary” and poised to address these needs through innovative income generation, downside protection, and tax efficiency strategies using options.
With approximately $4.8 billion in client assets under management as of February 2024, SpiderRock Advisors specializes in income and risk management strategies for both single securities and diversified portfolios, utilizing derivative overlay strategies. These services are offered through a wide range of channels, including RIAs, family offices, national broker/dealers, and institutional channels.
BlackRock’s acquisition of SpiderRock Advisors underscores its leadership and innovative approach within the SMA space for U.S. wealth management-focused intermediaries. Managing $186 billion in SMAs as of December 2023, BlackRock’s SMA franchise is renowned for offering customized strategies across a variety of asset classes, including Aperio’s direct indexing, actively managed fixed income, equity, and multi-asset strategies.
Eric Metz, President and Chief Investment Officer of SpiderRock Advisors, expressed enthusiasm about joining BlackRock, emphasizing the opportunity to expand the reach of SpiderRock Advisors’ options management solutions to a broader array of investors. Metz stated, “Innovative advisors and investors understand the value of options in their portfolios to better manage risk as we navigate a challenging capital markets landscape. We look forward to benefiting from BlackRock’s global reach and deep industry relationships as we seek to help more advisors deliver tailored options strategies to empower their clients towards achieving their after-tax investment goals.”
The acquisition is set to close in Q2 2024, subject to customary closing conditions, and is not expected to materially impact BlackRock’s earnings. Financial details of the transaction have not been disclosed. Legal counsel for the transaction was provided by Jones Day for SpiderRock Advisors, LLC, and Kramer Levin Naftalis & Frankel LLP for BlackRock, showcasing the meticulous planning and strategic partnerships involved in this significant industry move.
The acquisition of SpiderRock Advisors by BlackRock represents a significant advancement in the wealth management industry, signaling a shift towards more personalized, tax-efficient investment solutions. As demand for SMAs continues to grow, this strategic move positions BlackRock to capitalize on emerging market trends and client needs, further cementing its role as a leading provider of innovative investment solutions. With the integration of SpiderRock Advisors’ expertise and unique strategies into BlackRock’s broad portfolio of offerings, clients can expect enhanced options for managing their investments in line with their specific goals and circumstances.