Outsourcing could provide the solution of a cheaper, quicker, and more scalable trading, as merger activity propels the size of some of Australia’s super funds.
According to State Street, outsourced trading can help super funds and asset managers reduce costs, meet regulatory demands, improve transparency, keep up with rapid technological changes and access global liquidity sources. State Street Global Markets Asia Pacific head of portfolio solutions James Woodward said that as super funds merge and reach a threshold of FUM, they will be faced with the decision of whether to internalize their investment management.
Further, according to Woodward, outsourced trading can be utilized by a fund manager to fully outsource their trading functions, as well as boutique fund managers, as they may require some help and expertise in establishing execution capabilities across asset classes or launching portfolios in new geographies.
Woodward added that “a handful of the country’s largest super funds” already use outsourced trading.