CFS appoints BlackRock to manage MySuper funds

Colonial First State (CFS) has appointed BlackRock to manage its MySuper investment products FirstChoice Employer Super (FCES) and Commonwealth Essential Super (CES), after failure in the Your Future, Your Super performance test.

CFS was among the 13 funds that failed the inaugural performance test and the appointment marked a commitment to improve performance.

“Following the outcome of the Government’s Your Future, Your Super performance test, CFS is committed to making the necessary changes to improve its MySuper products’ performance and deliver the best outcomes for members,” it said.

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“As one of the largest asset managers in the world with around US$9.5 trillion ($12.8 trillion) in assets under management, BlackRock’s scale, its leading portfolio management capability and its access to market leading investment strategies – including third-party managers – will provide CFS’s MySuper products with the resources, insights and investment services needed to deliver outstanding member results.”

It followed a formal tender process carried out in consultation with a global investment consultant. 

The appointment related to CFS’s two MySuper products only and CFS would retain its internal investments capability in addition to the support the BlackRock partnership provided.

Both MySuper products would remain actively managed portfolios with CFS still maintaining ultimate control over management of the LifeStage funds.

CFS would continue to set the investment strategy, oversee investment decisions and manage the implementation of investment decisions in consultation with BlackRock. 

Kelly Power, CFS Superannuation chief executive, said it was important for members it acted quickly to ensure the products outperformed in the long run, as well as beating the performance test benchmark next year.

“This is our top priority to make sure that both MySuper products feature in the top quartile of MySuper products available in market. We have a strong track record of fee reductions and portfolio changes and we will continue to pass the benefits of our scale onto our members,” Power said.

“Partnering with the largest investment manager in the world will continue this commitment. The appointment of BlackRock to provide additional investment services relating to our MySuper offerings will expand CFS’s investment capabilities and allow us to leverage BlackRock’s global scale to lower costs.

“This has already supported a recent fee reduction to members, and will help these products exceed the Your Future, Your Super performance benchmark more quickly.”

Andrew Landman, head of BlackRock Australasia, said: “Drawing on our experience in managing whole portfolios globally, BlackRock will offer the full breadth of its platform coupled with its in-depth investment expertise to support CFS’ efforts to deliver enhanced investment outcomes to its MySuper members.

“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.

“It speaks to our core purpose of helping more and more Australians experience financial wellbeing, and in the process, helping them retire with dignity and security.”

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