UK - The £11bn British Coal Staff Superannuation Scheme is to make independent costs analyses of all its equity fund managers in bid to cut costs.
British Coal Scheme chief executive David Morgan had revealed that the scheme had saved £500,000 after it hired US trading cost consultancy Elkins McSherry to analyse share dealing operations of one of its fund managers, Goldman Sachs Asset Management.
New York-based Elkins McSherry specialises in “trade execution reports” which analyse the market impact of commissions and fees for every trade in a sponsor’s portfolio.
Morgan is now set to commission a similar analysis for two of the scheme’s other managers, Schroder Investment Management and Edinburgh Fund Managers.
He said: “We have a dialogue with Edinburgh and Schroders on this issue, although they manage smaller cap mandates where other issues such as liquidity raise their head. Having said that, we still expect – and see – professionalism from them.”
Morgan said the scheme had yet to open discussions with Fidelity Pensions Management on the subject.
Mercer Investment Consulting head of UK investment consulting Andrew Kirton predicted that other UK schemes will now follow suit.
He said: “Many more pension scheme trustees are going to look more closely and question their managers about the level and type of costs incurred that are associated with transactions.
“Mercer is very supportive of this and indeed has encouraged our clients to do so.”
Aon Consulting investment practice principal Chris Erwin agreed and felt it was especially important for small- to medium-sized schemes to use these services to cut costs, in light of current market volatility. Typically, it was the larger schemes that already used transaction cost analyses, he said.
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