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
Private market assets in super have surged, while private debt recorded the fastest growth among all investment types.
The equities investor has launched a new long-short fund seeded by UniSuper, targeting alpha from ASX 300 equities using AI insights.
The fund has strengthened efforts to boost gender diversity, targeting 40:40:20 balance across its investment teams by 2030.
The lower outlook for inflation has set the stage for another two rate cuts over the first half of 2026, according to Westpac.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 3 y p.a(%)
