Alternative investment platform iCapital has launched its first model portfolio. Called iCapital Multi-Asset Portfolio, it will allow financial advisors to invest in private equity, private credit and real assets through five funds operated by alternative asset managers, including Blue Owl Capital and Nuveen.
iCapital expects to launch more model portfolio options on its platform in the coming months.
“We are excited to introduce iCapital Model Portfolios, a quantitative approach that makes it easier for wealth managers to incorporate alternative investments into their client’s portfolios,” said Lawrence Calcano, iCapital chairman and CEO, in a statement. “As demand grows, iCapital will continue to work with a wide range of leading alternative asset managers to design and curate additional outcomes-based models that address other common goals for portfolio allocation strategies.”
iMAP is designed to balance income and growth strategies through investment in the private markets, focusing on reducing volatility and drawdowns associated with traditional asset classes. The portfolio will incorporate due diligence, manager selection, portfolio construction and continued investment monitoring functions. Financial advisors will be able to use iCapital’s Architect portfolio construction tools to analyze how the alternative investment options will impact their clients’ portfolios.
iCapital decided to unveil the balanced model portfolio first to appeal to the broadest audience of financial advisors on its platform, according to Steve Houston, managing director and co-head of iCapital Solutions. It picked the funds included in iMAP by focusing on evergreen registered vehicles that iCapital has published research on and then narrowing it down to several that would “blend well with one another to meet the [portfolio’s] objectives.”
Houston said the company plans to unveil model portfolios that will focus on high-growth and income-oriented strategies in the latter half of this year. The high-growth portfolio will be heavily weighted toward private equity and potentially incorporate venture capital funds. The income-oriented portfolio will likely feature private credit and real estate debt vehicles. As with iMAP, the offerings will be chosen from the evergreen registered fund universe. In addition, iCapital plans to work with some of its larger clients to create model portfolios that will be exclusive to them.
Offering advisors access to model portfolios and private market investment options is an area of increased focus for fintech platforms. In March, Yieldstreet partnered with investment research specialist Wilshire Advisors to expand its clients’ access to private market investment strategies.
“So many financial advisors use iCapital as their operating system as they are pivoting out of public markets and into private markets,” said Houston. “But right now, they have to choose individual funds. And we are happy to give them advice on individual funds and we provide research on individual funds and we provide the technology that allows them to make that journey. But so frequently they are saying: can you provide more advice on which funds we should choose? And looking at how they manage their public market portfolios, they are looking for the easy button. And diversified portfolios or model portfolios might be that easy button."