Discovery’s discretionary fund manager (DFM), Cogence, in partnership with BlackRock, is using data to give South Africans access to diversified, risk-profiled offshore assets.
BlackRock is one of the world’s largest asset managers, with $8.59 trillion in assets under management (AUM). It is a multinational company operating in 100 countries and has been operational in South Africa for 25 years.
BlackRock’s AUM is more than 45 times the size of South Arica’s entire unit trust industry. It combines active management and indexing and has consistently outperformed its own benchmark and the S&P 500 for decades.
Cogence was launched in August 2022 and is South Africa’s first global DFM. It aims to provide local financial advisors with a multi-manager solution to optimise their operations and expose clients to offshore assets.
Cogence executive Marize van der Merwe described this solution as “putting the right components together” to allow financial advisors to better communicate advice to their clients using data-backed information.
This data comes from two sources: Discovery Vitality and BlackRock’s Aladdin.
Vitality designed an algorithm, Health Futures, which collects data on a client’s physical health and is used to determine their lifespan, future health and, therefore, how much money they will need to retire comfortably.
Aladdin is BlackRock’s proprietary investment management platform that analyses risk and stress tests portfolios.
These two data sets are aimed at financial advisors, who can use the information to advise clients more holistically and provide them with the information they need to guide their investment decisions.
Cogence’s selling point is that, with its technology and data, advisors do not need to spend time researching the effects of risk and market volatility on their clients’ portfolios.
Rather, advisors can spend that time giving more in-depth advice to clients and assistance during times of volatility.
Following the regulation 28 amendment of the Pension Funds Act, which now allows retirement funds to invest up to 45% of their assets offshore, Discovery recognised a need for access to global assets in South Africa.
The organisation partnered with BlackRock, an organisation which prioritises diversity in investments, to offer South Africans global reach.
Cogence currently has seven multi-asset model portfolios – four local and three global – with asset allocations advised by BlackRock.
All of Cogence’s local portfolios have outperformed its ASISA category since inception, but its global portfolios have not outperformed their benchmarks.
Cogence is also partnered with a local asset manager, RisCura, which has R2.5 trillion in client assets under advice and reporting.
Van der Merwe told Daily Investor that Cogence currently has R200 million in AUM in South Africa and more globally.