Diary of an Investor: The price of everything
We Dutch are well known for keeping an eye on the price of things and for our frugal approach to life. Increasingly, this applies to pension funds. Like others, Wasserdicht’s Dutch pension fund will have to go into more detail on transaction costs from this financial reporting year.
This means our 2017 annual report will contain full look-through on transaction costs. We have been talking to our asset managers about providing the right level of detail. Geert, our head of investment strategy, has been leading the project.
Geert thinks the Dutch are temperamentally suited to opening up new horizons of transparency and openness. ‘It’s no coincidence that the telescope is a Dutch invention,’ he said in a recent meeting. ‘Just as in the sixteenth century, each advance in telescopic engineering today shows us how much we didn’t know before.’
He has been discussing how to capture things like market impact and preferential trading rates in some asset classes. ‘So far we have focused on disaggregating costs that are complex but not unfathomable,’ Geert explained to the trustees in a recent meeting. ‘For instance, we still don’t know the full picture of costs in areas like private equity.’
Geert has also been assessing whether our asset managers will be passing on the costs of sell-side research to us as they gear up for MiFID II compliance next year. ‘We will really have to see something of value if our managers want us to pay for sell-side research separately.’
Rolf, our chairman of trustees, is worried the focus on transparency will create a distorted picture. ‘One thing you find when you disaggregate costs is that people focus on splitting hairs. What we need to do is focus on which asset classes really add value in the long term and not to deviate from that.’
Somehow, the more information we have the harder this can be to achieve.
Pieter Mullen is investment director at Wasserdicht Pension Funds