'The solution isn't to abandon markets': BlackRock's Larry Fink is betting on a new wave of investment as a cure for economic anxiety. What he's selling and what it means for your portfolio

BlackRock (BLK) has long been known for its low-cost stock index funds, or ETFs, but Fink sees a big future in higher-fee private assets that aren’t listed on the stock markets.

“The solution isn't to abandon markets,” he wrote in his annual letter to investors.

“It's to expand them, to finish the market democratization that began 400 years ago and let more people own a meaningful stake in the growth happening around them.”

Fink has overseen BlackRock’s rise to the world’s largest money management firm with more than $10 trillion in assets. He also serves on the board of the World Economic Forum, and believes opening up private-equity markets will help reduce the gap between rich and poor..

More asset management firms offering private equity

Fink notes that up until recently, only wealthy people could invest in infrastructure projects like data centers, ports and power grids — let alone real estate or private credit. That’s because they aren’t publicly traded on stock exchanges. That’s where private equity comes in.

His firm is among a growing number of asset management companies — including Blackstone (BX), Apollo (APO) and KKR (KKR) — offering regular investors access to private equity,

To take the lead, last year, BlackRock acquired Global Infrastructure Partners for $12.5 billion and data firm Prequin for $3.3 billion. The firm is also wrapping up a $12-billion deal for private credit company HPS Investment Partners.

Together, these investments will help BlackRock manage $600 billion in alternative assets.

What do these developments mean for your portfolio?

Weighing benefits and risks of private equity in your portfolio

Fink suggested that the traditional 60/40 portfolio of stocks and bonds may no longer be enough to diversify effectively. Going forward, he sees a new standard: 50% in stocks, 30% in bonds, and 20% in private assets like real estate, private credit, and infrastructure.

To help retail investors tap into these markets, BlackRock has started rolling out model portfolios that include private equity and credit funds alongside traditional assets like stocks and bonds.

These portfolios, which average 15% exposure to private assets, are now available to U.S. investors.

While these new investment opportunities are exciting, it’s important to stay mindful of the risks.