BlackRock announced it has agreed to acquire the remaining equity interest in SpiderRock Advisors (SRA), a leading provider of customized option overlay strategies in the U.S. wealth market. This deal expands on BlackRock’s minority investment in SRA made in 2021 and reinforces BlackRock’s commitment to personalized separately managed accounts (SMAs).
SMAs are some of the fastest-growing segments in the U.S. wealth industry. And they are expected to grow from $2.7 trillion in AUM as of Q3 2023 to $4 trillion by 2026 (Cerulli Associates) – driven by a fundamental client need: the desire to customize portfolios for unique tax, values-alignment, or investment outcomes. Technological advances have made it even easier to access SMAs, and client demand for personalization continues to grow.
SRA managed about $4.8 billion in client assets last month. The firm’s SMA strategies are focused on income and risk management for single securities as well as diversified portfolios using derivative overlay strategies. They are accessible through RIAs, family offices, national brokers/dealers, and institutional channels.
BlackRock is a leader in SMAs for U.S. wealth management-focused intermediaries, managing $186 billion in SMAs as of December 2023. And the firm’s SMA franchise specializes in providing customized strategies, including Aperio’s direct indexing capability, actively managed fixed income, equity and multi-asset strategies to meet the growing demand for personalization in the marketplace.
The deal is expected to close in the second quarter of this year, and it is subject to customary closing conditions.
Jones Day acted as legal counsel for SpiderRock Advisors, LLC. And Kramer Levin Naftalis & Frankel LLP acted as legal counsel for BlackRock.
KEY QUOTES:
“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.”
- Joe DeVico, Co-Head of BlackRock’s U.S. Wealth Advisory business
“Each investor has unique circumstances inherent with a concentrated stock position or existing SMA portfolio. SRA’s highly complementary solutions can provide advisors with a comprehensive suite of customization capabilities that help solve clients’ unique challenges, such as income generation, downside protection, and tax-efficiency through the use of options.”
- Eve Cout, Head of Portfolio Design & Solutions pillar within BlackRock’s U.S. Wealth Advisory business
“We are thrilled to fully join the BlackRock team, and to broaden access to SpiderRock Advisors’ options management solutions for both taxable and tax-exempt investors. 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.”
- Eric Metz, President and Chief Investment Officer of SpiderRock Advisors
