Schroders has launched a service to help pension fund trustees shift their investment holdings from ...
Schroders has launched a service to help pension fund trustees shift their investment holdings from equities to bonds.
The structured overlay transition management service claims to be more cost effective than conventional transition management because it offers active management of the sale of equities to reduce investor losses.
The service aims to cut out many of the hidden transaction fees.
One obvious cost, according to Schroders, is that investors can incur charges over and above quoted execution fees when selling a large position into a falling market over several days.
This can involve a large loss for an investor, Schroders said. Less obvious costs such as the interest cost of deferring bond settlement so it will coincide with the equity settlement timetable can also have a deleterious effect on an investor's capital.
John McLaughlin, head of structured investments at Schroders, said pension fund trustees should be looking at managing transitions using structured overlays.
'The re-allocation of assets can then be effected at a much lower cost in a controlled, efficient manner,' he added.
£1bn business since inception
Considered doing so in 2015
Client communication considerations
Aviva: ‘We are sorry’
FOI from Professional Adviser