“JioBlackRock Asset Management aims to digitally deliver institutional quality investment products to investors across India and contribute to the growth of the country’s investment ecosystem,” said Sid Swaminathan, the newly appointed Managing Director & CEO.
Jio BlackRock Asset Management plans to launch a range of investment products in the coming months based on a “digital first” approach for retail and institutional investors. The products will apply BlackRock’s capabilities in data-driven investing including ‘Aladdin’, the US-based firm’s investment and risk management system, Jio BlackRock said.
What is Aladdin?
Aladdin is short for Asset, Liability, and Debt and Derivative Investment Network. Much like Amazon that commercialised its cloud platform after using it for captive purposes, BlackRock developed the Aladdin portfolio management system for its own holdings. It was then sold to clients as a software as a service to manage risk, move money across asset classes and analyse consumer data, besides tracking fund performance and changing portfolio values.
“Aladdin will find a perfect launch pad in JFS as Mukesh Ambani’s financial services play rests on a digital backbone from his existing ecosystem,” an official in the know had told ET when the JV was being formed. “Although lending to consumers and merchants will be JFS’s mainstay, it will look to also bulk up its non-lending side like insurance and asset and wealth management as well.”The Aladdin platform combines sophisticated risk analytics with comprehensive portfolio management, trading and operations tools on a single platform to power informed decision-making, effective risk management, efficient trading and operational scale.According to BlackRock, as a central processing system for investment management, Aladdin integrates and connects functions that help manage money. From portfolio management and trading to compliance, operations, and risk oversight, Aladdin brings together people, processes, and systems to help support a seamless investment process. Aladdin allows teams across investments, trading, operations, administration, risk, compliance, and corporate oversight to use a consistent process and share the same data. Aladdin creates value by helping to enable informed decision-making, effective risk management, and efficient trading.
Aladdin and its risk analytics are relied upon by over 200 institutions, including BlackRock. Clients include insurers, pensions, corporations, asset managers, banks, and official institutions.
Sudhir Nair, the global head of Aladdin at BlackRock and a senior managing director and member of Blackrock’s Global Executive Committee, had told Fortune in an interview two years ago, “Aladdin, in its beginning days, began as a risk-management technology, helping to understand the answers to very basic questions like: What do I own? And where do I own it? And what is the performance of this asset relative to the benchmark. And it just grew and grew. And the more you can keep all of your employees on the same page, using the same data, collaborating on the same technology, the more effectively you can serve your clients and the more efficiently you can operate.”
Ambani meets Aladdin
Aladdin fits well into Ambani’s plan of using data and technology to disrupt the Indian financial markets. Apart from deep pockets, both Ambani and Blackrock bring tech and data to the table. Ambani has spoken about his plans to offer tech-enabled access to affordable, innovative investment solutions for millions of investors in India. While the consumer data generated by Ambani’s retail and telecom business will come handy for the asset management JV, BlackRock brings to Ambani its famed asset management technology, Aladdin.
Ambani and Aladdin — the deep pockets, market experience and execution power of Reliance plus the expertise in investment and risk management and sharp technology of BlackRock — have come together to bite into a growing mutual fund market in India. The assets under management (AUM) of the Indian mutual fund industry touched the Rs 70 lakh crore mark.
“India’s asset management industry is undergoing a structural transformation, driven by rising investor maturity, fintech adoption, and regulatory reforms,” Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd., has written in ET. “With assets under management in direct mutual fund plans growing steadily, the sector is witnessing a democratisation of investment, spearheaded by younger, digital-first investors. This evolving landscape presents a compelling opportunity from an investment perspective. This transition has been accelerated by the rise of fintech platforms like Groww and Zerodha, which offer commission-free investment options with easy digital onboarding. While corporates continue to dominate direct AUM at 61%, retail participation is gaining traction, particularly through systematic investment plans (SIPs).”
India’s mutual fund landscape, being reshaped by technology and retail investors, is a perfect playground for Jio BlackRock Asset Management. Many think re-entry of Blackrock, after it ended its JV with DSP five years ago by selling its 40% stake to the partner, through JV with Jio Financial Services, will become a Reliance Jio-like disruptor for the mutual fund industry. But India’s mutual fund industry is different from the telecom industry with just a few incumbents. The mutual fund industry is highly regulated and rules out Ambani’s signature aggressive price play which had left telecom incumbents bruised and battered. However, Ambani will hope to ride on the huge scale that the business promises and fast-changing money habits of Indians who are drawn to mutual funds so much that banks are running low on deposits. Plus, the JV will ride on the data trails of lending and payments businesses of Jio Financial Services which, in turn, is driven by data from telecom and retail businesses of Ambani.
