UBS, Swisscanto disagree on importance of full cost transparency
Swiss pension funds have “no reason” to invest in funds that are not fully transparent on costs, Swisscanto has said in a debate on the cost of asset management.
The asset manager said it was convinced a Pensionskasse should implement its investment strategy “completely with cost-transparent investment vehicles”.
It pointed out that, even with hedge funds, it was possible to demand an audited annual financial statement and thereby calculate a total expense ratio (TER).
As part of the structural reform that has been implemented over the last few years, every Pensionskasse must calculate a TER and list vehicles for which no TER is calculated separately in its annual report.
Swisscanto also stressed that, within the cost debate, the individual net yield of each product must not be forgotten.
Only when a Pensionskasse knows the total costs of an investment can it judge whether the achieved net return is reasonable compared with the costs, it said.
UBS Global Asset Management “welcomed” the trend towards more transparency and said it had introduced a synthetic TER for certain alternative investments such as funds of hedge funds.
However, it also argued that institutional clients using hedge funds understood that, “for conceptual reasons”, some investments are less transparent than, for example, listed equities – “and they know this will not change”.
UBS added that higher regulatory demands, as well as the increasing complexity of investments, were leading to higher costs “that have to be covered”.