Model Portfolio
This information is provided for illustrative and educational purposes only. This information does not constitute research, personalized investment advice, or a fiduciary investment recommendation from BlackRock to any client of a third party financial professional, and is intended for use only by such financial professional, in consultation with their client and with other information, as a resource to help build a portfolio or as an input in the development of investment advice for its own clients. Such financial professionals are responsible for making their own independent judgment as to how to use this information. BlackRock does not have investment discretion over, or place trade orders for, any portfolios or accounts derived from this information. Holdings, performance, and other characteristics of any portfolios or accounts derived from this information may vary materially from the information shown herein. Please review the disclosures at the end of this document for more information.
Key takeaways from our recent Nashville investment forum:
We recently had the pleasure of hosting 75 clients representing some of our biggest Custom Model Solutions relationships for a two-day investment forum in Nashville.
I got to enjoy “Music City” during CMA Fest, and the din of the stages and the energy in the city made for a lively backdrop for a session I hosted on the biggest client investment questions. We had polled clients before they arrived so that I didn’t have to face live fire completely unprepared in my session!
The results of that poll, and the flow of discussion on the day and around the event continue to resonate in the current environment – so I share them for you below.
The enduring power of diversification
Diversifiers were, by far, the most prominent topic in responses, with a significant 34% of clients highlighting their importance. ”Diversifiers” may include a range of assets – bonds, liquid alts, bitcoin, and private alts were all specifically called out – but the driver of concern remains the same.
To me, this isn't surprising as clients have been laser-focused on diversification in their portfolios particularly since 2022. But it helps to look at market performance this year.
As we approach half time on 2025 – the S&P 500 has returned 6.2%, the Bloomberg Universal Bond Index has returned 4.1%, but a more globally diversified and actively managed 60/40 portfolio, represented by the BlackRock 60/40 Target Allocation Fund (BIGPX) has returned 7.4%. Investors have also benefitted from including additional “diversifiers” like bitcoin, gold, and liquid alternative in portfolios.
Simply put: diversification has worked. In today's dynamic environment, a well-diversified portfolio, incorporating a range of asset classes, remains crucial for navigating market fluctuations and achieving long-term goals.
Year-to-date returns (1/1/2025-6/30/2025)
Source: BlackRock, Morningstar as of June 30, 2025. Index performance is for illustrative purposes only. Indexes are unmanaged and one cannot invest directly in an index. Performance data represents past performance and does not guarantee future results. Investment return and principal value will fluctuate with market conditions and may be lower or higher when you sell your shares. Current performance may differ from the performance shown. For most recent month-end performance and standardized performance, click here
The iShares Trusts are not investment companies registered under the Investment Company Act of 1940, and therefore are not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940. Investments in these products are speculative and involve a high degree of risk.
Balancing appetite for risk with lingering concerns
While we generally observe a healthy appetite for risk in the current environment, 24% of respondents cited "risk-off," recession, volatility, or uncertainty as their top concern. This created for an interesting question from the room: if our overall sentiment towards risk is positive, why aren't we even more aggressively positioned?
We use AI-driven tools to analyze the corpus of financial news, company filings and broker reports to aggregate sentiment, and the result of that analysis today is holding our proprietary “Risk On/Risk Off” dial back. On the other hand, we believe earnings remain supportive of a positive outlook and signals we have developed on industrial metals and cross-currency momentum are keeping us tilted risk on, but marginally so at the moment. We continue to monitor market fundamentals closely, seeking opportunities that align with risk tolerance while acknowledging the prevailing cautious sentiment.
Navigating policy and tariff headwinds
Policy and tariffs emerged as a top concern for 28% of clients, a sentiment we find entirely understandable. Given the current global landscape, we believe this figure would likely be even higher if we were to re-poll today, as these issues are hard to escape.
I have two primary thoughts on this:
First, we are always monitoring macro factors and are prepared to step in when we see a real impact. A prime example is February 2022, when we took decisive action in response to unfolding events in Russia and Ukraine. Positioning for portfolio resilience in the face of such shifts is always a priority.
Target Allocation ETF 60/40 model portfolio changes over time
Source: BlackRock as of May 20, 2025. Allocations are for illustrative purposes only and subject to change.
Second, and perhaps more importantly for your day-to-day well-being, our advice is to "put down the internet and enjoy things IRL." In an age of constant information and often overwhelming news cycles, it's easy to get bogged down by external anxieties. There's no better time than now to tone down the digital noise, and I guess that starts with me ending this post!
Have a great summer!
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Authors
Michael Gates, CFA
Head of Model Portfolios Solutions, Americas, Multi-Asset Strategies and Solutions
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This information must be accompanied or preceded by a current iShares Bitcoin Trust ETF prospectus and iShares Gold Trust prospectus, which may be obtained by clicking here. Please read the carefully before investing.
Investing involves a high degree of risk, including possible loss of principal. An investment in the Trust is not suitable for all investors, may be deemed speculative and is not intended as a complete investment program. An investment in Shares should be considered only by persons who can bear the risk of total loss associated with an investment in the Trust. This information should not be relied upon as investment advice, research, or a recommendation by BlackRock regarding (i) the funds, (ii) the use or suitability of the model portfolios or (iii) any security in particular. Only an investor and their financial professional know enough about their circumstances to make an investment decision.
Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
The BlackRock model portfolios are provided for illustrative and educational purposes only. The BlackRock model portfolios do not constitute research, are not personalized investment advice or an investment recommendation from BlackRock to any client of a third party financial professional and are intended for use only by a third party financial professional, with other information, as a resource to help build a portfolio or as an input in the development of investment advice for its own clients. The BlackRock model portfolios themselves are not funds.
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Buying and selling shares of ETFs may result in brokerage commissions. Diversification and asset allocation may not protect against market risk or loss of principal. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets and in concentrations of single countries.
Alternative investments present the opportunity for significant losses and some alternative investments have experienced periods of extreme volatility. Alternative investments may be less liquid than investments in traditional securities. Investing in digital assets involves significant risks due to their extreme price volatility and the potential for loss, theft, or compromise of private keys. The value of the investment is closely tied to acceptance, industry developments, and governance changes, making them susceptible to market sentiment. A disruption of the internet or a digital asset network would affect the ability to transfer digital assets, and, consequently, would impact their value.
A fund's use of derivatives may reduce a fund's returns and/or increase volatility and subject the fund to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. A fund could suffer losses related to its derivative positions because of a possible lack of liquidity in the secondary market and as a result of unanticipated market movements, which losses are potentially unlimited. There can be no assurance that any fund's hedging transactions will be effective.
Diversification and asset allocation may not protect against market risk or loss of principal. There is no guarantee that the classification system used to determine a rotation model or strategy will achieve its intended results. Fund’s may engage in active and frequent trading of its portfolio securities which may result in higher transaction costs to the fund. Actively managed funds do not seek to replicate the performance of a specified index, may have higher portfolio turnover, and may charge higher fees than index funds due to increased trading and research expenses.
Investing in digital assets involves significant risks due to their extreme price volatility and the potential for loss, theft, or compromise of private keys. The value of the shares is closely tied to acceptance, industry developments, and governance changes, making them susceptible to market sentiment. Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on their acceptance. Changes in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network’s ability to grow and respond to challenges Investing in the Trust comes with risks that could impact the Trust's share value, including large-scale sales by major investors, security threats like breaches and hacking, negative sentiment among speculators, and competition from central bank digital currencies and financial initiatives using blockchain technology. A disruption of the internet or a digital asset network would affect the ability to transfer digital assets and, consequently, would impact their value. There can be no assurance that security procedures designed to protect the Trust’s assets will actually work as designed or prove to be successful in safeguarding the Trust’s assets against all possible sources of theft, loss or damage.
The information presented does not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy or investment decision.
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