BlackRock Buys SpiderRock for SMA Buildout
The deal will ramp up BlackRock’s Wealth Advisory business.
BlackRock Inc., the world’s largest asset manager at more than $10 trillion AUM, is increasing its focus on separately managed accounts (SMA) with the planned acquisition of Chicago-based SpiderRock Advisors.
The deal, which is expected to close in July, expands New York-based BlackRock's stake from the 25% it acquired in 2021 to 100% ownership.
“I think this was always their intention, and it was our hope that they would acquire the entire business,” SpiderRock president, chief investment officer and co-founder Eric Metz told etf.com.
Founded in 2015, SpiderRock has grown into a $4.8 billion options overlay platform for financial advisors and institutional investors. In February, SpiderRock unveiled plans to use put and call options on the most liquid spot bitcoin ETFs to create collars that would reduce the volatility of cryptocurrency investments.
“We see this as the biggest opportunity in the space,” Dave Donnelly, SpiderRock managing director said at the time.
“The ability to hedge an outstanding universe of crypto is probably the biggest story as it pertains to wealth managers having access to these products,” he added.
That kind of innovation is what resonated with BlackRock over the past three years as a SpiderRock minority owner.
“We needed to execute the partnership to build things out and mesh with their larger organization,” Metz said. “It was very strategic on both sides.”
Metz cited BlackRock’s 2021 acquisition of separate account and tax-optimization platform Aperio as an indicator of where the asset manager is heading and why SpiderRock fits into the plan.
“We were ahead of the curve in listed derivatives and options overlays and that’s what BlackRock pursued,” he said.
Potential of Customized Portfolio Offerings
Nate Geraci, president of The ETF Store in Overland Park, Kan., said BlackRock is zeroing in on the potential of customized portfolio offerings in the financial advisory space.
“Options-based strategies are clearly resonating with advisors right now, so it makes sense for BlackRock to expand its offerings in this category,” he said. “I expect them to continue further widening access to this segment, primarily through SMAs and ETFs.”
The SpiderRock transaction is still subject to shareholder approval and details were not disclosed, but BlackRock acknowledges its increasing focus on its $186 billion separately managed accounts platform inside its U.S. Wealth Advisory business.
“In today’s market, advisors and clients are looking for investor outcomes and personalized solutions,” said Eve Clout, head of Portfolio Design & Solutions within BlackRock’s Wealth Advisory business.
She added that building up the SMA platform with options overlay strategies is aimed at helping advisors build scale to easily offer more sophisticated levels of customization to clients of all levels.
“This is solely so we can better help financial advisors,” Cout said.
