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Watsons’ exchange to knock 40bps off global equity costs

Cutting feesInvestment consultancy Willis Towers Watson says it will reduce the fees that pension schemes pay for global equity funds by 20-40 basis points after adding an Irish fund structure to its exchange platform.

The firm has made space on its Asset Management Exchange (AMX) distribution platform for common contractual funds (CCFs) - an Irish tax-transparent vehicle - and said this will allow pension funds “in the UK and beyond” to access global equity strategies in a tax-efficient manner.

Pension schemes from a range of jurisdictions will benefit from their tax-exempt status while also retaining the advantages of investing in pooled funds, the firm said.

Willis Towers Watson launched AMX as “the first institutional investment marketplace” in 2017 to create economies of scale, increase standardisation and reduce duplication of costs for investors.

Oliver Jaegemann, global head of AMX, said a large proportion of UK pension schemes were significantly invested in global equities and that AMX had identified a need to address inefficiencies in their processes. 

“Some schemes are simply unaware of the implications of withholding tax structures. In part, this is because more traditional fund structures tend to be opaque from a tax perspective,” he said.

Willis Towers Watson said UK pension scheme allocations to global equities have been “steadily rising” at the expense of UK equities and now represent an average of 61% of total equity allocations.

When the firm launched AMX in February 2017, Willis Towers Watson said it would “fundamentally transform” the asset management market place.

At the time, AMX had $750 million of delegated hedge fund assets on it. Latest figures show AMX has $3 billion of overall assets on the platform.

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