Category: Stock Market

One expert has warned that one part of the market is signalling that there will be 2 interest rate rises from the Reserve Bank in the next 13 months or so.

The share market has obsessed over a jump in inflation, and therefore interest rates, all throughout this year.

Rate hikes make borrowing money more expensive, therefore it is generally not helpful to stocks, especially for growth companies.

Higher interest rates also pull up the yield for bonds, making them more attractive to investors. Money that might have been ploughed into the share market is then diverted away, thereby decreasing demand for stocks.

BetaShares chief economist David Bassanese warned Monday that the Australian bond market is rising.

“Despite the [protests] of RBA governor [Philip] Lowe, the local bond market is now pricing in two rate hikes by end of 2022.”

Australian bonds have risen more than US

While the US Federal Reserve has flagged that a tapering in COVID-era stimulus would be coming soon, the RBA has insisted rate rises are years away.

The market reaction seems to suggest that message is falling on deaf ears.

“Indeed, local 10-year bond yields have lifted a little more than those in the US since the bottom in yields in late July – the yield spread has widened – with the market simply not believing the RBA won’t follow the Fed.”

Bassanese added that this means Australian fixed-rate bonds are looking attractive, especially compared to its US counterpart.

“RBA minutes are due tomorrow and governor Lowe speaks on ‘Independence, Mandates and Policies’ on Thursday.”

Pengana Australian Equities Fund analyst Mark Christensen said earlier this month that his team has been buying up ASX shares that could be resilient against higher rates.

“We look for business models that have an element of inflation protection built into them, and which have pricing power.”

Inflation triggers coming

The Delta variant of COVID-19 that brought Australia’s 2 most populous cities to a standstill for months now seems to be waning.

Vaccination coverage is now high in both Sydney and Melbourne, with the former already lifting many restrictions.

But funnily enough, this good news may translate to higher inflation, as the economy roars back to life.

Bassanese said last week’s numbers expectedly showed that employment and business conditions both suffered during the lockdowns.

But underlying sentiment was positive, suggesting a rapid recovery.

“Business and consumer confidence are still holding up fairly well – at or above long-run average levels – suggesting the economy is poised to bounce back solidly once the NSW/Victoria lockdown ends.”

The post 2 interest rate hikes by the end of 2022? Seriously? appeared first on The Motley Fool Australia.

More reading

• What is the outlook for the NAB (ASX:NAB) share price?
• 5 things to watch on the ASX 200 on Tuesday
• Why now could be the time to buy the Transurban (ASX:TCL) share price
• CBA (ASX:CBA) share price up amid $15b MySuper deal
• Here are the top 10 ASX shares today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The good news for income investors in this low interest rate environment, is that there are countless dividend shares for investors to choose from on the Australian share market.

But with so many to choose from, it can be hard to decide which ones to buy.

To narrow things down, I have picked out two ASX dividend shares that are rated as buys by analysts. They are as follows:

Adairs Ltd (ASX: ADH)

The first dividend share to look at is Adairs. It is a leading retailer of furniture, homewares, and home furnishings in Australia and New Zealand. Thanks to its strong market position and omni-channel footprint, which gives it exposure to both online and in-store growth, Adairs has been tipped to grow at a solid rate over the 2020s.

This is expected to lead to the payout of generous dividends in the coming years. For example, Morgans is forecasting fully franked dividends per share of 22 cents in FY 2022 and then 27 cents in FY 2023. Based on the current Adairs share price of $3.81, this will mean yield of 5.8% and 7%, respectively.

Morgans has an add rating and $4.20 price target on the retailer’s shares.

DEXUS Property Group (ASX: DXS)

Another ASX dividend share to look at is Dexus. It is an Australian real estate company focused on owning, managing, and developing office, industrial, and retail properties.

DEXUS has a high quality portfolio of assets and has just added to this through the acquisition of $1.5 billion worth of industrial assets. These assets include Jandakot Airport in Perth and a logistics centre leased to Australia Post. All in all, they bring DEXUS’ industrial portfolio to $11.3 billion in value and 4.6 million square metres in size.

The team at Macquarie were pleased with the deal. In response, the broker has retained its outperform rating and lifted its price target to $11.90. The broker is also forecasting dividends per share of 53.7 cents in FY 2022 and then 58.1 cents in FY 2023.

Based on the current DEXUS share price of $10.64, this will mean 5% and 5.45% yields, respectively.

The post 2 excellent ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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What is the outlook for the National Australia Bank Ltd (ASX: NAB) share price?

Over the past year, the NAB shares have gone up 48%. That compares to the return of the S&P/ASX 200 Index (ASX: XJO) which has only risen by around 18%. NAB has outperformed the ASX 200 by around 30% over the last 12 months.

But that’s the past. What about the future?

Broker ratings on the NAB share price

Last year, many brokers said that the it was worth buying NAB shares. The big four ASX bank has certainly been a performer during 2020 and the first half of 2021.

But the buy ratings are less numerous now. For example, Credit Suisse recently downgraded its rating on NAB shares from a buy to a hold.

Credit Suisse thinks that NAB has turned its performance around, however it thinks that the valuation now fully reflects that optimism. At the time of its rating change, the broker also noted that NAB was no longer valued at discount compared to the other big banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

On Credit Suisse’s numbers, the NAB share price is valued at under 15x FY21’s estimated earnings.

Morgan Stanley is another broker that doesn’t have a buy rating on NAB. The broker also noted the positive signs at NAB, but it thinks that revenue isn’t going perform strongly.

The broker thinks that NAB is valued at 14x FY21’s estimated earnings.

However, there are a handful of analysts that have buy ratings on the big bank. For example, Ord Minnett has a buy rating with a price target of $29.50. One of the reasons for that positive outlook is the fact that things are looking up for the small business sector.

What are the bank’s thoughts?

The latest update from the bank came after it announced its FY21 third quarter when it said it generated $1.7 billion in the three months – an increase of 10.3% year on year.

The NAB share price has risen by more than 5% after the release of this quarterly update.

Management described the quarter as encouraging, supported by significantly better credit impairment outcomes.

NAB said it was particularly pleasing to see the “strong momentum” across the business. In Australia, whilst housing lending rose 2%, the small and medium enterprise (SME) lending increased by 4.3%.

The NAB CEO Ross McEwan said:

We have a clear focus on where and how we will continue to grow. The exit of MLC Wealth is now complete, and the acquisitions of 86 400 and Citigroup’s Australian consumer business will help accelerate our growth strategy.

We remain optimistic about the long-term outlook for Australia and New Zealand. The strong economic momentum leading into this period, ongoing government support and customers’ relatively healthy starting positions give us confidence that once restrictions are eased, the economy will again bounce back.

NAB share price snapshot

After the strong run of NAB shares since the bottom of COVID-19, the big bank now has a market capitalisation of $93.4 billion according to the ASX.

The post What is the outlook for the NAB (ASX:NAB) share price? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why now could be the time to buy the Transurban (ASX:TCL) share price
• CBA (ASX:CBA) share price up amid $15b MySuper deal
• Here are the top 10 ASX shares today
• The Westpac (ASX:WBC) share price is up 30% so far in 2021. Here’s why

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week on a positive note. The benchmark index rose 0.25% to 7,381.1 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to give back the majority of yesterday’s gains on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 22 points or 0.3% lower this morning. This follows a mixed night on Wall Street which in late trades sees the Dow Jones down 0.2%, the S&P 500 up 0.3%, and the Nasdaq trading 0.8% higher.

CSL R&D day

The CSL Limited (ASX: CSL) share price will be one to watch this morning when it holds its annual research and development (R&D) day. At the event, the biotherapeutics giant will provide the market with an update on the progress it is making with its current developments and is likely to unveil some new products that it is working on.

Oil prices mixed

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) will be on watch following a mixed night for oil prices. According to Bloomberg, the WTI crude oil price is up 0.2% to US$82.43 a barrel, whereas the Brent crude oil price has fallen 0.7% to US$84.25 a barrel.

Gold price softens

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could trade lower today after the gold price edged lower. According to CNBC, the spot gold price is down 0.1% to US$1,766 ounce. The safe haven asset dropped amid rising US Treasury yields.

IDP Education’s AGM

The IDP Education Ltd (ASX: IEL) share price could be on the move on Tuesday. This morning the language testing company is holding its annual general meeting and is expected to provide an update on its performance so far in FY 2022. The IDP Education share price hit a record high on Monday, so expectations are high for this update.

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy the Transurban (ASX:TCL) share price
• CBA (ASX:CBA) share price up amid $15b MySuper deal
• Here are the top 10 ASX shares today
• The Westpac (ASX:WBC) share price is up 30% so far in 2021. Here’s why
• Own Woodside (ASX:WPL) shares? Here’s what the World Energy Outlook could signal

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. and Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Those looking for an excuse to buy the underperforming Transurban Group (ASX: TCL) share price may get their wish.

Morgans believes now is a good time to be buying the toll road operator and has upgraded its shares to “add” from “hold”.

The upgrade couldn’t come at a better time as the Transurban share price has barely budged this calendar year.

Transurban share price stuck in the slow lane

In contrast, the S&P/ASX 200 Index (Index:^AXJO) has gained more than 10% while other ASX infrastructure shares have zoomed ahead.

For instance, the Sydney Airport (ASX: SYD) share price and Spark Infrastructure Group (ASX: SKI) have surged over 30% each in 2021. It helps that both ASX shares received takeover interest.

Changing gears triggers upgrade

But coming back to the Transurban share price, Morgans believes value can be unlocked by changing the way the market looks at the company’s debt.

The broker previously applied a constant 0.7 equity beta to its cost of equity estimate. This was only applied to the DCF valuation of Transurban’s assets.

The equity beta reflects the sensitivity of geared cashflows to broader macroeconomic and market conditions. A value greater than 1 implying a higher risk than the market and below 1 as less risky than the market.

Since toll roads are defensive assets, Morgans estimates Transurban’s risk is 30% below the broader market.

Valuation increase for the Transurban share price

But when the broker adjusted the beta to account for the differences in NPV gearing across assets or time, Transurban’s share price valuation jumped.

“Our change is to adjust the equity beta for an asset’s NPV gearing, by assuming a constant asset beta (0.47 based on delevering our estimate of TCL’s historical statistical beta) and relevering this based on the NPV gearing of each road concession,” explained Morgans.

“Hence, this captures differences in the cost of equity due to gearing.

“For instance, we estimate debt vs NPV for Transurban Qld at 38% and thus 7.6% pa cost of equity (assuming 3% pa risk free rate and 6% pa market risk premium). The Hills M2 has 13% NPV gearing and we apply a 6.3% pa cost of equity.”

What is the Transurban share price worth?

Previously, the broker applied a consistent 7.2% per annum cost of equity to both assets.

The adjustments led Morgan’s to increase its price target on the Transurban share price to $14.82. This compares to its previous target of $13.99 a share.

The post Why now could be the time to buy the Transurban (ASX:TCL) share price appeared first on The Motley Fool Australia.

More reading

• CBA (ASX:CBA) share price up amid $15b MySuper deal
• Here are the top 10 ASX shares today
• The Westpac (ASX:WBC) share price is up 30% so far in 2021. Here’s why
• Sydney Airport (ASX:SYD) share price slides on takeover update
• These 3 ASX 200 shares are topping the volume charts this Monday

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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May it be possible that the AMP Limited (ASX: AMP) share price can rise more than 10% and reach $1.25 by Christmas?

It may be useful to know that a price target is where the broker estimates that the business will be valued in 12 months from now. So, whilst the AMP share price could reach that target by Christmas, the broker is only estimating where AMP will be in a year from now.

Which broker thinks the AMP share price will reach $1.25?

It’s Citi that thinks that AMP shares can rise by 10%.

However, the broker doesn’t rate the financial business as a buy, just rating it as a hold.

Citi believes that AMP can go through a large transformation and become more profitable as the business changes.

What is the financial company doing?

A couple of months ago it reported its FY21 half-year result.

It said that there was an improved performance, with a recovery in economic and market conditions, as well as the ongoing transformation strategy, resulting in a 57% increase in underlying earnings.

Half-year underlying net profit increased from $115 million to $181 million. This reflected higher investment income, a “strong” cost performance and increased earnings in AMP Bank, which benefited from the release of credit loss provisions.

In terms of restructuring the business, it said that it has made a “significant” step forward in the reshaping of the implementation of a new service model for aligned advice and conclusion of the ‘buyer of last resort’ arrangements from the end of 2021.

AMP also said that demerger plans are on track. The sale of the Global Equities and Fixed Income (GEFI) business has been agreed and the Multi Asset Group transfer is underway. The internal operational separation is targeted by the end of FY21, with the demerger to complete in the first half of FY22.

The valuation on the AMP share price

According to Citi, currently the AMP shares are valued at under 11x FY21’s estimated earnings.

It’s then expecting profit to increase in FY22. So, that puts the AMP shares at under 10x FY23’s estimated earnings.

The broker also thinks that AMP could pay a dividend in FY22 of $0.05 per share. That would translate to a forward dividend yield of 4.5%.

However, there are also some brokers that don’t believe AMP shares are going to move much over the next year. UBS is one of those brokers, with a price target of $1.14. That’s almost the same price that it’s at right now. UBS notes the ongoing outflows that AMP is experiencing.

UBS doesn’t think these problems are going to be resolved in the rest of the 2021 financial year, though it’s monitoring what could happen with/after the demerger.

The post Can the AMP (ASX:AMP) share price hit $1.25 by Christmas? appeared first on The Motley Fool Australia.

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• Here’s what happened to the AMP (ASX:AMP) share price in the FY21 third quarter
• AMP (ASX:AMP) share price lifts amid new board appointments
• Why this top broker sees 16% upside for the AMP (ASX:AMP) share price
• How has the AMP (ASX:AMP) share price beaten the market over the past week?
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Could the Macquarie Group Ltd (ASX: MQG) share price reach $240 by the time Christmas rolls around?

There is a broker out there that currently has that $240 price target on Macquarie.

It’s the analysts at Morgan Stanley that rate the business as a buy with the hefty target. However, it’s important to remember that a broker price target is where they believe the business will be trading in 12 months from now, not just by Christmas.

Why is Morgan Stanley so bullish on the Macquarie share price?

Over the last year, the Macquarie share price has already gone up by around 40%.

But the broker is expecting that the global investment bank can go up another 20%.

A key reason for the bullish sentiment about Macquarie by Morgan Stanley relates to the ‘green’ exposure that the investment bank has and how that could be a strong growth runway for the company.

Last month, the global investment bank gave a profit update for the market. In that, it said that it was expecting its FY22 first half profit to be slightly down on the second half of FY21. But that actually represents a material increase in profit year on year compared to the first half of FY21.

Green exposure

In that profit update, Macquarie outlined a number of green factors.

Relating to climate change, it said that it has financed emissions aligned to net zero by 2050. It has invested A$6.64 in renewable energy for every A$1 invested in ‘conventional’ energy. The goal is for Macquarie Asset Management’s portfolio to be net zero by 2040.

Macquarie says that it has 30 GW of green energy assets in development as at 31 March 2021. It had 14 GW of green energy assets in operation or under management at 31 March 2021.

Talking about Macquarie’s direct operations, it is on track for net zero by 2025. It says that it has been carbon neutral since 2010. The investment bank said that it’s targeting 100% renewable electricity by 2025. Emissions per capita have reduced by 71% from FY20.

The market-facing business Macquarie Capital is playing its part in making profit and helping the world become greener with renewable energy projects and the supply of green energy solutions to corporate clients.

But one of the key operating groups within Macquarie is the Green Investment Group (GIG), described as one of the leading renewable energy developers and investors in the world. It has more than $2 billion of current commitments, with more than 250 projects in development and construction. GIG also has over $45 billion of committed and arranged money to support green energy projects.

What is the earnings estimate valuation on the Macquarie share price?

Morgan Stanley is expecting profit growth from the investment bank over the next couple of years.

Based on that, the broker thinks that the Macquarie share price is valued at 21x FY22’s estimated earnings and 19x FY23’s estimated earnings.

The post Can the Macquarie (ASX:MQG) share price hit $240 by Christmas? appeared first on The Motley Fool Australia.

More reading

• What leading brokers are saying about the Macquarie (ASX:MQG) share price
• Why did the Macquarie (ASX:MQG) share price have such a great FY22 first quarter?
• Is the Westpac (ASX:WBC) share price a buy for its 7% dividend yield?
• Why the Macquarie (ASX:MQG) share price hit its all-time high on Friday
• How did the Macquarie (ASX:MQG) share price perform in September?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Late last month, we covered the explosive initial public offering (IPO) of Li-S Energy Ltd (ASX: LIS). The battery tech company initially floated on the ASX boards at a share price of 85 cents. But soon after its first hour or two of trading, this company had ballooned as high as $3.05 a share. That was an intra-day gain of roughly 260% for the Li-S Energy share price. Incredible stuff.

So how has this exciting company fared in the days and weeks that have followed this attention-grabbing ASX IPO debut?

Well, the Li-S Energy share price has certainly gone back to what could be described as ‘normal behaviour’ for an ASX share. Over the past 3 weeks, we have seen Li-S Energy bounce around a fair bit. A few days after its IPO, Li-S shares gave up much of their initial gains, and hit a low of $1.82 a share on 1 October.

By the following week though, Li-S Energy was back up at $2.41 a share. After another dip last week which saw the company fall to $2.11, this week has seen the company move back upwards again. As it stands today, Li-S Energy has closed at a price of $2.34 a share, up 4.46% for the day. That happens to be the share price it closed last Monday. It also represents a 23% drop from the high watermark Li-S Energy hit, after its IPO.

It’s possible that the extreme volatility we have seen with this company stems from what it does.

Li-S Energy share price cools after explosive IPO

Li-S Energy is in the business of batteries. Rechargeable batteries to be precise. It is working on a new battery technology called Lithium-Sulphur, which is where the ‘Li-S’ comes from. According to the company, Li-S batteries have the potential to be more energy efficient, lighter, safer, as well as less environmentally taxing than the current and dominant lithium-ion technology that most rechargeable batteries currently use.

As many investors would be aware of, battery technology and renewable energy are hot areas on the markets right now. With countries around the world embracing the ‘net-zero by 2050’ target for reducing greenhouse gas emissions, investors have been scrambling to back what could be the energy winners of the future. Judging by what happened with the Li-S Energy IPO, it seems there are more than a few investors who are bullish on this company as a part of that story.

At today’s closing Li-S Energy share price of $2.34, the company has a market capitalisation of $336.32 million.

The post Why has the Li-S Energy (ASX:LIS) share price dropped 23% since its ASX IPO? appeared first on The Motley Fool Australia.

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The Rumble Resources Ltd (ASX: RTR) share price has had a disappointing day after the company released assay results from its 75%-owned Earaheedy Project’s Chinook zinc-lead discovery.

While the news looks positive, the market sent the metal exploration company’s stock tumbling lower.

As at Monday’s close, the Rumble Resources share price was trading at 49 cents, 13.27% lower than at end of the Friday’s session.

Let’s take a closer look at what Rumble Resources announced today.

New discoveries at Chinook

The Rumble Resources share price has plunged lower on news the company has extended Chinook discovery’s mineralisation envelope by 44% to 4.1km by 1.9km. Additionally, the mineralisation remains open in all directions.

The company noted it found zinc and lead in several drill holes within 50 metres of the main tenement boundary.

The other side of the boundary houses Rumble’s pending application. The company imagines the strike extends into the tenement under application, which hosts the Sweetwater zinc-lead prospect.

Rumble Resources also reported gold in the assay results.

Furthermore, the company has found silver at the project for the first time. It identified a silver zone with associated copper and arsenic underneath the zinc-lead-gold mineralisation.

What did management say?

Commenting on the news, Rumble Resources managing director Shane Sikora said:

Based on the drilling results to date, field observations and our developing understanding of the geology of this potential tier 1 sediment hosted zinc-lead system, it is becoming very clear there is potential to delineate multiple shallow, flat lying open pittable zinc-lead deposits throughout the 45 kilometres of strike at Earaheedy.

So far, the company has only received results from around 25% of the completed drilling. The drilling program is ongoing.

Rumble Resources share price snapshot

Despite today’s dip, the company’s shares are trading 308% higher than they were at the start of 2021.

The Rumble Resources share price has also gained 206% since this time last year.

The post Rumble Resources (ASX:RTR) share price slides 13% on project updates appeared first on The Motley Fool Australia.

More reading

• Why has the Rumble Resources (ASX:RTR) share price leapt 12% in a week?
• Why is the Rumble Resources (ASX:RTR) share price leaping 11% today?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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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.

The post CBA (ASX:CBA) share price up amid $15b MySuper deal appeared first on The Motley Fool Australia.

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• These 3 ASX 200 shares are topping the volume charts this Monday
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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