Cogence’s plan to shake up South Africa’s asset management industry

Cogence plans to shake up South Africa’s traditional asset management industry by using BlackRock’s investment and risk technology platform, Aladdin Wealth, and tapping into Discovery Vitality’s data and behavioural change models. 

Founded in August 2022, Cogence aims to equip advisers with the tools to provide their clients with best-of-breed advice. 

This will be done by marrying the institutional quality risk management technology Aladdin Wealth with global asset research and allocation insight from BlackRock, supported by RisCura’s local investment expertise. 

Where available, individual clients’ unique health and behavioural data, collected by Vitality, can be factored into perfecting individual portfolios. 

Cogence CEO Jonel Mathee-Ferreira explained in more detail how this would work in an interview with Daily Investor. 

Ferreira joined Cogence on 2 January 2024, assuming the roles of CEO and CIO and has almost 20 years of senior management experience in asset management.

She noted that the company was late in entering the asset management market but believes its unique proposition gives it a strong enough edge to compete effectively against established investment firms. 

A big part of this edge is using BlackRock’s investment and risk technology platform, Aladdin Wealth. 

This platform enables Cogence to stress-test investment portfolios better to manage the balance between risk and potential reward. 

Aladdin Wealth also enables the company to enhance its forward-testing capabilities to accurately predict how its investment portfolios will perform. 

BlackRock also provides Cogence with recommended asset allocation strategies for its fund, which it can use to build a fund using the American giant’s extensive data and expertise. 

However, Cogence can differ from this recommendation, providing the firm with the flexibility to adapt to a changing environment. 

As part of this, the firm also uses a mix of passive and active strategies to enable clients to get the average returns of the index with access to active fund managers who can make bets to outperform the market. 

The other half of Cogence’s competitive edge is its ability to tap into Discovery Vitality’s extensive data on South Africans’ health. 

This enables it to incorporate an individual’s health, particularly their life expectancy and quality of life, into investment decisions. 

Cogence is thus able to craft individual investment strategies to recommend how much someone needs to save for retirement, how they should save for retirement, and the amount they need to save regularly to reach that target. 

The firm plans to gradually build out its fund offering and technology capacity over the next few months. 

This is being made more difficult by the uncertainty in global financial markets, as more than 60 countries will hold elections in 2024. 

The uncertainty is being compounded by the increased sensitivity of financial markets to external events, making it a tough time to build an asset management business.