The wealth division of investment advisory firm Morningstar is teaming up with Apollo, Franklin Templeton and J.P. Morgan Asset Management to launch a suite of public and private model portfolios to increase access to private markets.
Set to launch later this year, the portfolios will consist of exchange traded funds (ETFs) and interval funds and address implementation challenges through multi-manager selection, transparent pricing, and disciplined portfolio construction.
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Investors will be able to choose from six risk profiles, ranging from capital preservation to aggressive growth, with public and private exposures integrated into a single asset allocation.
The initial portfolios will include exposure to private credit and real estate, representing approximately between 12 and 20 per cent of the allocations, depending on risk profile and current market opportunity. The private market strategies will be delivered by Apollo and Franklin Templeton.
“By packaging private market exposure within a diversified model, Morningstar Wealth aims to remove the burden of sourcing, sizing, and managing liquidity, allowing advisors to focus on client needs rather than portfolio construction,” the firm said.
Morningstar also stressed that the portfolios will be subject to rigorous due diligence and ongoing oversight, and will provide clear disclosure of liquidity and portfolio characteristics.
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Jim Zelter, president of Apollo, said: “The next generation of model portfolios will blend public and private markets, and offer investors greater diversification, more yield, and better reflect the full breadth of the economy.”
With a greater variety of investors seeking to incorporate private markets into their portfolios, Kunal Kapoor, Morningstar’s chief executive officer, said the firm is helping “navigate complex private markets and democratize access to them for even more investors.”
A recent survey by Morningstar found that 72 per cent of the retail segment does not invest in private markets, and 52 per cent avoids alternatives altogether even though globally 1,643 private companies are valued at over $1bn (£0.7bn).
