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South Africa’s first global discretionary fund manager launched by Discovery

23 August 2022 Discovery

Cogence will bring asset allocation views from BlackRock, one of the world’s leading asset managers, together with personalised insights from Vitality

Discovery Group today announced the launch of Cogence, a discretionary fund manager (DFM) seeking to significantly enhance the business of wealth creation in South Africa. Cogence will bring asset allocation views from BlackRock, one of the world’s leading asset managers, together with personalised insights from Vitality to provide investment solutions including model portfolios. This new investment solutions offering will be enhanced by Aladdin Wealth™ technology, an industry-leading platform from BlackRock which provides portfolio analytics and risk analysis.

Adrian Gore, Discovery Group Chief Executive said the impetus behind entering the DFM space is based on two distinct areas that have been disrupted.

“Firstly, investment markets are more sophisticated and complex than ever. At the same time, we’re seeing local investors increasingly looking to invest more globally. For South Africans it’s been hard to do so but with but with the recent regulatory changes, pension funds and mutual funds are now able to invest up to 45% in offshore assets. This means we can invest nearly half of our retirement savings in offshore assets – that’s powerful. Research and understanding of risks and the opportunities that global markets present is crucial.”

“Secondly, more than 90% of people in South Africa can’t afford retirement, relying on their family or state and often the elasticity of savings behaviours is more important than investment returns. Cogence is built upon BlackRock’s asset allocation views and has been designed to pair Aladdin Wealth™ technology with Vitality’s data and analytics to incorporate personalized health and longevity metrics, which essentially maps out every aspect of a financial plan. These metrics consider how long you will live, how healthy you will be, how much money you need and importantly, supports financial advisors in making recommendations to their clients.”

Cogence combines Discovery’s investment expertise with BlackRock’s deep knowledge of asset management to help financial advisers try to realise improved investment outcomes for their clients. Through Cogence, financial advisers will also have access to proprietary Aladdin Wealth™ technology.

Kenny Rabson, CEO of Discovery Invest said, “Navigating financial planning for the future is multi-dimensional and is compounded by complexities and difficulties. The ability to use technology to model the impact that these factors will have on retirement provision is becoming vital and investors need global expertise with local applicability.”

Andrew Keegan, BlackRock’s EMEA Head of Wealth for Multi-Asset Strategies & Solutions (MASS) said, “BlackRock has been serving the South African market for many years and so we are particularly proud to be collaborating with Discovery to deliver several key elements of this innovative new retirement solution. With Cogence, we’re delighted to be putting BlackRock’s global expertise in asset allocation and whole portfolio construction, coupled with our industry-leading Aladdin Wealth™ technology, at the service of South African savers.”

Aladdin Wealth™, which will be available to local financial advisers in South Africa for the first time through Cogence, enables financial advisers to gain a full and unique picture of their clients investments along with access to a wide range of sophisticated analytical tools, such as portfolio stress testing. These tools aim to provide a better understanding of the drivers of risk in a client’s portfolio, thereby enabling the advisor to make more informed investment decisions.

Cogence will have access to the global asset allocation expertise of BlackRock and will also leverage the expertise of RisCura, a renowned local investment firm with billions of rands of assets under advice, years of local asset management expertise and leading research capabilities. RisCura selects funds on the local front using their leading due diligence capabilities and on-the-ground experience.

“RisCura is proud to take this next step with Discovery based on our shared values. We intimately understand the needs of South African investors and what it takes to achieve exceptional returns, while fostering growth and development on our home ground,” said Andrew van Biljon, Head of Investment Management at RisCura.

The asset management industry is becoming more complex, and this trend is expected to continue, making it increasingly challenging for financial advisers to manage their clients’ assets. More onerous regulations, rapid growth in the unit trust industry, currency volatility, and the emergence of alternative asset classes all contribute to this. In this ever-changing landscape, financial advisers need managed solutions to simplify the asset management process, reducing advice and compliance risk in their practice.

Gore concluded, ”Our combined behavioural science and global investment expertise will support local financial advisers to deliver more timely information, deeper insights, and superior service to clients that can ultimately result in an optimal retirement outcome. With lifespans extending, clients need the financial means to retire comfortably and drawdown at a sustainable income level; and most importantly, also the good health to ensure they can enjoy it.”

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