Fidelity Investments is simplifying how advisors integrate alternative investments into client portfolios by expanding its custom model portfolio options.
This strategic move caters to two major trends shaping the wealth management landscape: the growing popularity of model portfolios among advisors and the increasing demand for alternative asset allocations, including private equity and private credit.
Model portfolios managed by third parties reached $646 billion in assets under advisement as of March 2025, a 62% increase since mid-2023 and more than double the assets from mid-2021, according to Morningstar. Amanda Robinson, Fidelity’s head of wealth advisory managed solutions distribution, highlights the firm's goal of addressing advisor challenges in implementing alternative strategies. “Advisors seek diversification beyond traditional assets but often perceive alternatives as complex to execute. Our solution is designed to be efficient and customizable,” Robinson explains.
The Boston-based custodian collaborates with Envestnet, a leading fintech platform, to offer professionally managed model portfolios that integrate alternative investments. Other asset managers, including BlackRock, are part of this initiative, which operates through Envestnet’s unified managed account platform. Fidelity emphasizes that it won’t impose an overlay fee for the new portfolios, though underlying funds carry standard expenses. The portfolios aim to provide access to private equity, private credit, and real assets via interval and tender offer funds.
Tailored Solutions for Advisors
Fidelity currently offers 121 turnkey model portfolios, designed to deliver diversified, risk-adjusted returns, alongside 500 customizable portfolios that allow advisors to tailor investment strategies to client needs. These customizable options enable advisors to select specific managers or incorporate alternative investments to meet unique preferences.
“We recognize the value of our turnkey portfolios for many clients but also acknowledge that some advisors require greater flexibility to align with specific investment preferences,” a Fidelity representative notes. This flexibility supports advisors in enhancing client portfolios with bespoke solutions.
The Model Portfolio Advantage
Model portfolios have become a cornerstone of modern wealth management, offering advisors a scalable, time-efficient way to manage client assets. Industry giants such as Fidelity, BlackRock, and Vanguard provide a range of off-the-shelf and customizable options to suit diverse client needs. Historically built around passive ETFs, model portfolios are increasingly incorporating actively managed ETFs, reflecting the rising number of active ETFs launched in recent years. In 2024 alone, approximately 500 active ETFs debuted.
Morningstar’s analysis highlights an emerging trend of blending public and private investments in model portfolios. This innovation creates new opportunities for clients who might not meet the traditional high minimums required for direct investments in alternatives. Historically exclusive to high-net-worth and institutional investors, alternative assets are now accessible to a broader audience, albeit with associated cost considerations.
Fee Implications of Alternatives
While model portfolios streamline investment management, integrating alternatives often increases overall costs. For instance, interval funds—a favored structure for accessing private investments—carry significantly higher expense ratios compared to traditional ETFs and mutual funds. Morningstar reports that the average expense ratio for interval funds’ least expensive share class was 2.30% as of May 2025, far exceeding the average asset-weighted fee of 38 basis points for model portfolios in December 2024.
Despite these higher costs, asset managers remain committed to expanding access. BlackRock, a dominant player in the model portfolio space, captured 80% of total net inflows last year, demonstrating robust advisor demand for well-constructed portfolio solutions.
Expanding Client Access
Fidelity’s inclusion of alternatives aligns with its broader mission to provide advisors with tools that enhance client outcomes. By incorporating private equity, private credit, and real assets into its portfolios, the firm is enabling advisors to deliver greater diversification and potential resilience in client portfolios.
This initiative reflects a broader industry trend toward democratizing access to sophisticated investment strategies, empowering advisors to better serve their clients’ evolving needs while maintaining efficiency and scalability. As demand for alternatives continues to rise, Fidelity’s approach positions it as a leading partner for advisors seeking innovative, client-centric solutions.
