The Commonwealth Bank of Australia (ASX: CBA) share price went up 1.6% today as it told investors about its investment management news.
The funds management division Colonial First State (CFS) announced that it's going to partner with Blackrock, one of the world's largest asset management businesses. CBA is on track to divest 55% in CFS to KKR.
What is Blackrock going to do for CFS?
The partnership with Blackrock relates to the 'FirstChoice Lifestage' portfolios. This is for CFS' MySuper products, FirstChoice Employer Super and Commonwealth Essential Super.
This partnership reflects the desire to continue to improve the performance of these products.
CFS believes that due to the size, breadth and skill of Blackrock's investment team and resources, it positions CFS' MySuper offerings to be well-placed compared to large super fund offerings.
With the introduction of the new 'Your Future, Your Super' performance test, CFS and CBA are making changes to ensure it has the best chance of exceeding the test.
CFS said:
Partnering with BlackRock and utilising their global scale and international investment skills, technology capabilities and consistent track record of delivering competitive returns, will allow us to improve the performance of our MySuper products more quickly.
BlackRock has a large team, systems and tools already in place to manage against the new Your Future, Your Super benchmark. BlackRock's global scale will enable us to lower costs, which has already supported a further fee reduction in the administration fee for FirstChoice Employer Super customers.
In Australia and New Zealand, Blackrock manages around $150 million on behalf of local clients.
Blackrock will be providing things like research, recommendations and Aladdin – BlackRock's proprietary risk and investment system.
Management comments
The newspaper Australian Financial Review quoted Kelly Power, chief executive of superannuation at Colonial, who said this would allow CFS to outperform in the long-term. She said:
I think this makes us a better business. We are adding more capability. This partnership, along with the recent fee reductions, are just more proof points of us being really serious about being a competitor in this industry. We're really open to partnerships that bring unique capabilities.
BlackRock head of Australasia Andrew Landman said, according to the AFR:
BlackRock is honoured to have been appointed. We have a strong heritage in serving Australian superannuation entities and we recognise it is a great responsibility to help manage the retirement savings of many Australians.
CBA share price gains
Whilst CBA shares went up more than 1.6% today, it should taken in context with the fact that the S&P/ASX 200 Index (ASX: XJO) rose 0.26% to 7,381 points.
