POWERED BY MOMENTUM MEDIA
Equity trading cost knowledge can help save
Superannuation funds could be missing out on significant savings as they have very little information on how much equity trading costs and how efficiently they make their trades, Parametric believes.
The asset management firm said when measured, trading costs should include explicit and implicit trading costs, the latter including spreads and price impacts as it is highly variable and skill-dependent.
Parametric's Australian arm head of research, Raewyn Williams, said as trading Australia and international equities on average comprised of 44 per cent of total funds invested, it was imperative for super funds to give the issue more attention.
"This is another area of implementation efficiency where there could be considerable savings made," Williams said.
"To trade a passive Australian equity portfolio patiently, full costs begin at 21 bps [basis points] per $1 traded and can rise to as much as 66 bps per $1 traded.
To trade a passive international equity portfolio patiently, costs begin at 11 bps per $1 traded and can rise to 26 bps per $1 traded. This is the most conservative scenario. "
Williams said the main driver of explicit trading costs is whether research is included in the service, or if it is execution only and the amount of ‘order flow' directed to the broker.
The main drivers of implicit trading costs are the asset class traded, the size of the trades, how active the portfolio is, and how aggressive the trading style is.
Williams said funds needed to demand transparency from their managers and/or internal teams to measure trading costs and assess the efficiency of their underlying trades.
Recommended for you
Governor Bullock took a more hawkish stance on Tuesday, raising concerns over Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
