BlackRock Buys SpiderRock as World’s Largest Asset Manager Expands SMA Business

BlackRock (BLK) is set to expand its offerings in separately managed accounts (SMAs) as the firm announced a deal Friday to acquire the remaining stake in SpiderRock Advisors.

The world’s largest asset manager first purchased a minority stake in SpiderRock in 2021, which managed about $4.8 billion in assets as of February.

“By giving BlackRock more SMA capabilities, this acquisition will enable us to meet growing demand from wealth managers for personalized, tax-efficient portfolios,” Co-Head of BlackRock’s U.S. Wealth Advisory business Joe DeVico said.

SMAs represent one of the fastest-growing segments of the U.S. wealth management industry, with a recent Escalent survey finding financial advisors expect to rely more on SMAs in the next year. BlackRock, citing research from Cerulli Associates, anticipates that SMAs will grow to $4 trillion in assets under management (AUM) by 2026 from $2.7 trillion as of Q3 2023.

BlackRock managed an estimated $186 billion in SMAs as of December, and that figure is set to grow with the acquisition of SpiderRock. Compared to pooled vehicles like mutual funds and exchange-traded funds (ETFs), SMAs can offer greater customization and some tax advantages, though they may also have higher account minimums.

“Innovative advisors and investors understand the value of options in their portfolios to better manage risk as we navigate a challenging capital markets landscape,” SpiderRock President and Chief Investment Officer Eric Metz said. “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.”

SpiderRock is the latest in a series of deals BlackRock has already announced this year, including multiple acquisitions expanding its holdings in infrastructure.

The deal is expected to be finalized in the second quarter of this year. Financial terms were not disclosed, but BlackRock said the “impact of the transaction is not material” to its earnings.

BlackRock shares edged 0.5% higher to $836.12 Friday, and are up about 4.5% for the year so far.