[Edaily Marketin, Reporter Soyoung Park ] Global asset management firms are offering comprehensive portfolios—including private assets—targeted at high-net-worth individuals and wealth management (WM) clients. Previously, portfolios were primarily composed of △stocks, △bonds, △exchange-traded funds (ETFs), and △publicly offered funds. This means that the asset class has recently expanded into the private market to include △private equity (PE), △private loans, and △real estate.

This trend is particularly strong in the U.S. market. Private assets, once considered the exclusive domain of institutional investors (LPs), have begun to enter the realm of high-net-worth individuals. In the domestic wealth management market as well, attention is focused on whether the practice of bundling private and alternative assets into model portfolios—going beyond the mere sale of individual private products—will gain traction in the future.

10 According to the global investment banking (IB) industry, the “model portfolio” approach—in which private assets are included in high-net-worth individuals’ investment portfolios—is gaining traction. Global market research firm PitchBook also recently assessed that the market is shifting from “fund picking,” where individual funds are selected, to “model picking,” where the portfolio itself is chosen.

A model portfolio is a standardized portfolio in which the allocation of assets and products is pre-designed according to investment preferences. It does not involve financial advisors or private bankers (PBs) customizing a combination of products for each client one by one. Instead, it is a structure where clients select a pre-designed portfolio and rebalance it according to market conditions.

In fact, this market is steadily expanding. Global investment information firm Morningstar reported that assets in third-party model portfolios reached $934 billion (approximately 1,324 trillion won) as of the first quarter of this year. This represents a 46% increase from the previous year. Morningstar noted that approximately 70% of the firms surveyed either already offer model portfolios—including private assets—or plan to do so in the future.

Global asset managers are indeed rolling out model portfolio products one after another. For example, Franklin Templeton launched a private market model portfolio last May. It bundles multiple private funds into a single separately managed account (SMA), enabling end-to-end processing—from subscription to rebalancing and portfolio management.

In March, Fidelity launched a model portfolio that diversifies investments across △private equity funds, △private debt, and △real estate. This structure allows Registered Investment Advisors (RIAs) and broker-dealers to offer the portfolio to clients through the asset management platform Envestnet.

In addition, BlackRock has moved away from the traditional 60% equities, 40% bonds asset allocation model to incorporate alternative investments. It has proposed the “50·30·20” approach—comprising 50% equities, 30% bonds, and 20% alternative investments—as one of its new portfolio strategies.

In South Korea, model portfolios are typically used in discretionary Individual Savings Accounts (ISAs) and retirement pension plans. Securities firms and banks provide asset allocation plans tailored to different investment styles based on these model portfolios.

An official from the global investment banking industry described the current sentiment, stating, “In global markets, discussions regarding asset allocation have already expanded beyond simply how to divide the ratio between stocks and bonds to include how much to allocate to private assets.” However, the official added, “Given the nature of private assets, managing liquidity, valuation, and fees remains a challenge.”