BlackRock’s Aladdin information and analytics platform, by far the biggest such service in the investment world, has taken on a new and important position in Australia. Our two largest fiduciary funds, AustralianSuper and the Future Fund, are about to sign up, which may well double the platform’s reach in this region.
Aussie Super has, actually, already committed and the Future Fund is understood to have put Aladdin as the favoured candidate, after competitive tenders. Other providers have pitched the Future Fund for separate components of the service. It is understood the organisation, which speaks for about $160 billion, including the smaller funds attached to its main mandate, favours a one-stop-shop relationship. Aussie Super has $130 billion under management.
The addition to those fiduciary funds to the Aladdin client list is significant because, until now, the service has been seen as being primarily designed for fund managers. Certainly, in Australia, managers have represented its main clientele. Asset owners represent a big new market.
And, while BlackRock does not reveal the dollar figures of assets under management using the service, industry chat suggests that the combined $290 billion from Aussie Super and the Future Fund could more than double the total previously serviced by Aladdin in Australia and New Zealand.
An article in ‘The Economist’ newspaper (they call themselves a ‘newspaper’, not a magazine) in 2013 considered the repercussions of lots of investors using the same signals, such as that provided by Aladdin. At the time, ‘The Economist’ said, Aladdin had about US$15 trillion in AUM which used its service. At the time, BlackRock had US$4 trillion under management in its own right. It now has US$6 trillion. In more recent reports, it is most often suggested that about US$20 trillion in AUM receives Aladdin information.
BlackRock’s Australian client funds, which speak for about A$100 billion in Australian-domiciled funds, get some Aladdin reporting services for ‘free’ as part of their funds management contracts. The good stuff, however, costs extra. But BlackRock executives say words to the effect of: ‘It’s information. It’s up to the recipient to do whatever he or she wants to do with it’. Hard to argue with that.
Joseph Kochansky, a managing director at BlackRock, and head of the Aladdin Product Group (APG), said last week that it was up to the clients to leverage the information that Aladdin gave them. He has been with the firm – Aladdin, that is – for more than 20 years. BlackRock, the world’s largest fund manager by a wide margin has taken over other fund companies and morphed into a diversified business along the way. But Aladdin, an entity in its own right, remains true to its roots.
Kochansky said: “It’s like driving a car. A car has its engine, and its seats and all the other things in a car, but where the driver goes is up to the driver.” He was speaking from Budapest. Hard to argue with that, too. Wouldn’t you love to go to Budapest?
Greg Bright is publisher of Investor Strategy News (Australia)