FOUNDATION FOR A FINANCIAL FUTURE - JSE MAGAZINE

FOUNDATION FOR A FINANCIAL FUTURE

As long-standing specialists of investment solutions, risk management and global advisory, BlackRock, is well placed to serve the country

BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. At 30 June 2017, BlackRock assets under management totalled $5.6 trillion.

BlackRock helps clients around the world meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares ETFs (exchange-traded funds) and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional clients through BlackRock Solutions.

As of 31 March 2017, the firm had approximately 13 000 employees in more than 30 countries, and a major presence in global markets, including North and South America, Europe, Asia, Australia, the Middle East and Africa.

BlackRock has had a client base in SA for more than 20 years and, through its index business and active natural resources, emerging markets equity and debt, and global equity and bond teams, it has been investing in SA companies for decades.

During the course of 2016, BlackRock received approval to register a set of offshore funds (35 comprising iShares and mutual funds) in SA. The funds are variously available for both retail as well as individual investors in the country, and this is evidence of BlackRock’s commitment to the SA market.

The range of funds it chose to register was the result of thorough consultation with existing and prospective investors that are looking to diversify their offshore investments into indexed strategies.

These strategies have continued to grow in popularity among SA investors and BlackRock believes its funds provide investors with greater choice for implementing their investment views.

Local investors have struggled to add cost-effective international equity and bond exposures to their investment portfolios.

BlackRock has a wide offering spanning asset classes and geographies, and it has extensive market intelligence and industry-leading risk management, as well as analytic capabilities.

Over the past few years, the global asset management industry has seen a significant rise in indexation. BlackRock maintains that this can largely be ascribed to changes in the regulatory environment worldwide, aimed at making the investment industry more transparent, especially for investors.

This can be seen with the US’ introduction of its Department of Labour’s fiduciary rule, MiFID (Markets in Financial Instruments Directive) in Europe and Retail Distribution Review (RDR) in the UK. These same trends are playing out in SA as well, with the introduction of our RDR regulation.

There is much more focus on a lowering of costs for the end investor, and this has resulted in a shift toward passive investing. BlackRock maintains that the debate has now shifted away from pure ‘active versus passive’, to finding ways in which indexed funds and strategies can be part of a balanced retirement portfolio.

In addition, as indexation has grown over the years, so has the specialisation of these funds. According to the firm, smart beta lies somewhere between actively managed and indexed strategies. These funds typically focus on the true drivers of returns, and aim to look holistically at alpha and beta, active and passive, liquid and illiquid investments – and finding a way for these to cohesively fit together.

BlackRock believes the disciplined, rules-based approach of smart beta strategies has aided its growth significantly, in that this provides an element of greater transparency for investors.

For investors, this means that true active strategies should outperform in periods of volatility, while smart-beta strategies could offer low-cost transparent rules-based alternative options to underperforming managers. Index strategies, says BlackRock, will continue to gain favour in areas where it achieves yield at a low cost.

Please note, the above information is for professional investors only.

1st Floor, Regus Convention Towers,
Cnr Heerengracht and Walter Sisulu Streets,
Cape Town, 8001
Tel:+27 (0)21 403 6447
www.blackrock.com\za
This material is for distribution to professional clients (as defined by the FCA or MiFID Rules) and qualified investors only, and should not be relied upon by any other persons. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: 020 7743 3000. Registered in England No. 2020394. For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. Please be advised that BlackRock Investment Management (UK) Limited is an authorised Financial Services provider with the South African Financial Services Board, FSP No. 43288. Past performance is not a reliable indicator of future results. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time. Capital at risk. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. The value of your investments can go down as well as up, so you could get back less than you invested.