Building The Model Portfolios Of Tomorrow: A Conversation With BlackRock’s® Jeff Saef & KraneShares’ Jonathan Shelon

A quiet revolution is underway in portfolio construction.

Many investors are losing confidence in the 60/40 stock-bond portfolio structure, forcing a transformation in the way model portfolios are built to meet the increasing demand for diversification and liquid alternatives.

In a keynote panel at the Wealth Management Edge 2025 Conference, Jonathan Shelon, Chief Operating Officer of KraneShares, sat down with Jeffrey Saef, Global Head of Model Portfolios at BlackRock®, to explore the transformation underway in model portfolio strategy. During their discussion, Shelon and Saef unpacked key shifts in the rise of alternative assets and diversification, the adoption of AI and automation, and the growing demand for tax-aware solutions.

Below, we included a highlight reel of the session and summarized the key highlights of the conversation.

What are model portfolios and why do they matter?

Model portfolios are professionally designed investment strategies that consist of ETFs and mutual funds, typically aligned toward conservative, moderate, and aggressive levels of risk. According to Saef, while initial adoption was slow, many financial advisors now use model portfolios to create a framework for asset allocation and investment selection, constantly altering them to fit their clients’ needs. One of the most significant reasons for this shift is the efficiency that model portfolios create, not just in their construction, but in how advisors manage their time and scale their practices.

Saef explained, “The big number that everybody points to... is that, on average, advisors are saving a little over 200 hours a year by converting to a model-based practice, and ultimately pivoting to either serving their clients deeper or growing their businesses.”

Saef emphasized how those who make use of model portfolios can save time that would otherwise be spent allocating assets. With this extra time, Saef believes that advisors can focus more on their clients, learning how to personalize their investments to suit their needs. Clients also benefit from diversified exposures and improved compliance.

"Those advisors that have adopted models-based practice… enjoy 91% faster growth rate than their peers,” said Saef.

These dramatic improvements experienced by advisors who use model portfolios underscore what Saef now describes as the “widespread adoption of model portfolios”, and how they’ve matured to become strategic advantages in a competitive wealth management landscape.

Model Portfolio Philosophy

Saef explained how the 60/40 stock-bond portfolio is losing relevance among younger investors. He said that according to a survey conducted by the Bank of America, when asked if stock-bond portfolios are sufficient to sustain the future of investing, one in four of those aged 21-43 said no. Going one step further, those surveyed called attention to the importance of liquid alternatives and diversifiers.

Shelon added: "Over reliance on... traditional stocks and bonds may be insufficient going forward. There's a cohort that says a higher allocation to alternatives is important, and we believe that's very much true.”

Building on that, Shelon explained how KraneShares approaches model construction with global thematics and attention to macroeconomic trends. Shelon noted that KraneShares considers global inflation and interest rate changes while layering its expertise in China’s emerging markets, constructing models with a forward focus.

“We are trying to bring in intellectual property that makes the portfolio genuinely uncorrelated and forward-looking. That’s the only way to build something durable.”

KraneShares has launched its Strategic Wealth Model Portfolios, which uses both KraneShares’ and BlackRock’s® iShares ETFs to build portfolios focused on international exposure and liquid alternatives.

Shelon also mentioned that these portfolios allocate15-20% to liquid alternatives, which include manage futures and carbon credits, to position investors to weather volatility and provide them with expanded investment opportunities beyond traditional assets.

Future of Model Portfolios

Both Saef and Shelon agree that the future of model portfolios may be shaped by hybridization, deep personalization, and automation involving artificial intelligence. As the investment landscape naturally becomes increasingly complex, and as personalization, tax overlays, and private market access rise in demand, the two firms believe incorporating AI both as an investment theme and a way to strengthen client interactions and portfolio customization will gain prominance.

Shelon explained how its global portfolios feature companies that benefit from the rise of AI.

“We’re building portfolios today that just weren’t possible a few years ago, combining public and private exposure, integrating AI themes, and delivering it all through an ETF wrapper. That’s where the future is heading.”

AI isn’t just an investment theme. It is also a tool. BlackRock® has begun to use AI to enhance client communication and portfolio personalization. For high-net-worth clients, AI is being applied to meet the rising demand for deeper customization.

“…we’re asking questions… about how do we personalize and customize the ways you can serve and communicate to your clients, whether it be simple reporting on the model portfolio or trying to tailor what’s going on in markets specific to the experience the client’s having with their assets.”

Conclusion

Model Portfolios are increasingly at the center of wealth management. As new investors look beyond the 60/40 stock-bond portfolio, firms like BlackRock® and KraneShares are paving the way for a transformation in investment strategy, shifting their focuses towards diverse portfolios that provide unique investment opportunities and thematic exposures, as well as reflect global macroeconomic shifts and changes and the rising demand for tax-aware solutions.

By combining technological innovation with a diverse spectrum of investments, BlackRock® and KraneShares are shaping a new era of portfolio construction built for resilience, adaptability, and lasting relevance.

For more information on KraneShares Strategic Wealth Model Portfolios, click here.

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Important Disclosures:

The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication and are provided for limited purposes, are not definitive investment advice, and should not be relied on as such. Predictions, opinions, and other information contained herein are subject to change continually and without notice and may no longer be true after the date indicated. Any forward-looking statements speak only as of the date they are made, and Krane Funds Advisors, LLC (“KraneShares”) assumes no duty to and does not undertake to update forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Actual results could differ materially from those anticipated in forward-looking statements.

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Krane Model Portfolios are for illustrative purposes only to demonstrate how certain ETFs, including KraneShares ETFs, can potentially fit into an investor’s portfolio. The model portfolios do not represent investment advice or an investment recommendation by KraneShares. Financial professionals can use the model portfolios, together with other information, and their own independent judgment, as a resource to help build a portfolio or to aid in the development of investment advice for their clients. KraneShares does not have investment discretion over, or place trade orders for, any account derived from the Krane Model Portfolios by a financial professional. Accordingly, the holdings, performance, and other characteristics of any account derived from the Krane Model Portfolios by a financial professional may vary materially from the Krane Model Portfolios.

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