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BlackRock Boosts SMA Capabilities With Stake in SpiderRock Advisors

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What You Need to Know

  • The deal follows BlackRock's acquisition of SMA provider Aperio in early 2021.
  • SpiderRock is a $2.5 billion provider of customized options strategies for U.S. wealth managers.
  • SpiderRock's strategies, available through RIA custodians, are focused on risk management and yield enhancement.

BlackRock has taken a minority stake in SpiderRock Advisors, a $2.5 billion Chicago-based  provider of customized options strategies for U.S. wealth managers, to expand its SMA capabilities.

The “strategic venture,” as BlackRock calls it, will help expand BlackRock’s separately managed account capabilities, and it follows the firm’s acquisition of Aperio, a provider of customized, tax-optimized index equity SMAs, earlier this year.

Terms of the deal with SpiderRock Advisors were not disclosed.

SpiderRock’s strategies are available through major RIA custodians and are focused on risk management and yield enhancement for diversified portfolios as well as concentrated stock positions, according to BlackRock.

The market leaders and consultants in BlackRock’s U.S. Wealth Advisory will serve as the primary distribution and marketing team to introduce SpiderRock’s advisory services and strategies to wealth firms and financial advisors.

BlackRock’s SMA franchise, which specializes in providing customized actively managed fixed income, equity, and multi-asset strategies, managed over $190 billion in SMAs as of March 31, 2021. It expects the venture with SpiderRock Advisors will help expand the breadth of those  capabilities.

“BlackRock continues to invest to equip wealth managers with innovative solutions that support the twin objectives of better after-tax performance and personalization,” said Martin Small, Head of BlackRock’s U.S. Wealth Advisory business. We are eager to help advisors access SpiderRock Advisors’ capabilities to help them build tax-efficient, highly customizable portfolios that can generate income and manage risk for their clients.”

Eric Metz, president and chief investment officer of SpiderRock Advisors, said in a statement that “between potential tax reform, historically low interest rates, and volatile equity markets, options-based strategies and solutions can often solve client objectives more efficiently than conventional allocations and techniques.”

The U.S. retail and wealth SMA market totals approximately $2.1 trillion in assets and is growing at approximately 15% annually and 35% among RIAs, according to Cerulli Associates. The use of option overlay strategies in the SMA market has also grown as well as markets have reached new highs in the past few years and investors accumulated concentrated stock positions. BlackRock expects the use options strategies in SMAs will continue to grow as investors continue to look for better ways to tackle a market that is volatile market and has low yields.