British Coal Fund Extends Efforts to Cut Transaction Costs

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Byline: Pirkko Juntunen

The British Coal Staff Superannuation Scheme is talking to its investment managers Schroder Investment Management and Edinburgh Fund Management about how to reduce transaction costs, after Goldman Sachs Asset Mangagement (GSAM) saved the fund [pound]500,000 ([euro]785,000).The [pound]11bn scheme and GSAM, which manages 82% of the fund, have spent four years working to reduce transaction costs.David Morgan, chief executive of the fund, said: "The understanding of transaction costs is a key component of our work. Commission for the scheme amounts to [pound]10m in a year and the potential timing and opportunity costs and market impact are significantly greater than that. A budget of that order merits significant management time, as this saving alone demonstrates. These costs are incurred on our behalf by our managers and our interests are aligned by open and transparent dialogue. "Paul Myners was right to draw attention to commission costs in his report, but you really have to manage transactions costs as a whole and not just commissions in isolation," he concluded. …