Discovery Limited, a South African financial services corporation owned by South African mogul Adrian Gore, has partnered with BlackRock Inc., a U.S. multinational investment management firm, to establish a new management entity as part of its strategic expansion initiatives.
In accordance with the agreement with BlackRock, the world’s largest asset management firm, the new asset management entity will be formed under the brand name “Cogence” and operate as a discretionary fund manager (DFM) — a company whose clients are primarily financial advisors but can buy and sell investments at its own discretion.
The launch of Cogence, Discovery’s DFM, is part of the company’s concerted efforts to tap into the fast-growing billion-dollar discretionary fund management industry and build on the group’s February partnership with AIA Group, a Hong Kong-based insurance and finance group, to launch a pan-Asian health insurance technology business.
According to Discovery, Cogence is built on BlackRock’s asset allocation viewpoints and was designed to incorporate customized health and longevity data, which essentially map out every aspect of a financial strategy.
Financial advisors can utilize Cogence to gain a complete and unique picture of their customers’ investments, as well as access to a variety of sophisticated analytical tools including portfolio stress testing.
Gore, Discovery Group’s CEO and a leading businessman who derives the majority of his multi-million dollar wealth from his 7.48-percent stake in the Sandton-based firm, said the move is a strategic attempt to deliver value through a completely different perspective on global fund management.
“What we’re bringing here is a totally different view to global fund management, where instead of just a view of a single asset manager, you’re getting global research coming in from BlackRock,” he said.
He revealed that, as part of the vacuum Cogence is attempting to address, several DFMs in South Africa lack extensive knowledge of the offshore market, and Cogence will be available on the platforms of other fund managers with its range of products.
Gore noted that Discovery’s entry into the DFM industry was motivated by increased demand from local investors wishing to invest more abroad.
He also stated that the launch of Cogence is likely to increase participation because more than 90 percent of South Africans cannot afford retirement, relying on family or the state, and that the flexibility of savings behaviors is often more important than investment returns.
