BlackRock pushes to the fore in private-asset ETF race

investmentnews.com:

A high-stakes race is taking shape between major money managers including BlackRock Inc. and Invesco Ltd. to combine Wall Street’s most trendy investment vehicle with its fastest-growing asset class.

The firms are among those signaling they want to offer access to private markets via ETFs, a tie-up with the potential to open the closed-off world to investors of all stripes. It could also channel fresh cash into an asset class struggling to keep the boom alive after years of breakneck expansion.

The challenge? Even these investing behemoths will need to overcome a slew of technical and regulatory hurdles before they can squeeze the likes of real estate and pre-public companies into the famous ETF wrapper.

“It won’t be quite so linear as, well, go buy a bunch of buildings and smack them into an ETF,” said Doug Sharp, Invesco’s head of Americas and EMEA, who confirmed his firm is exploring the idea. “I would expect innovation in the space, but the path there is a bit less clear.”

With private markets now worth more than $13 trillion and billions pouring into ETFs every month at the expense of old-fashioned mutual funds, the motivation to figure it out is strong.

BlackRock’s $3.2 billion deal to buy Preqin, a provider of alternative-asset data, is part of the firm’s ambition to “index the private markets,” Chief Executive Officer Larry Fink said after the acquisition was announced in early July. The world’s largest money manager believes it can bring the principles of indexing and iShares — its ETF arm — to the industry, Fink said. Preqin competes with Bloomberg LP, the parent of Bloomberg News.

While it may not happen in the near term, “the ETF-like wrapper for private assets could be very important to investors in the