350,000 Workers Benefit After Billions Pulled From Asset Managers
Britain’s $32 billion railway pension scheme has halved the cost of running its biggest asset pool by moving investments in-house.
RPMI RailPen, which oversees the retirement assets of 350,000 British railway workers, pulled billions of pounds from hedge funds and other money managers, reducing the cost of overseeing its main fund to half a percentage point. And there’s more cost-cutting to come, says the firm’s investment chief.
“Fifty basis points is not bad for something that has property in it, but we could do more,” Ciaran Barr, the investment director for RailPen, said in an interview. “We’ll continue to be pushing costs down. Where we are paying money to external parties, we’re looking at whether we’re getting a fair share of the profit.”
The pension scheme, the seventh-largest in the U.K., has hired fund managers and back-office staff since a review of its investment processes in 2013 found it would be cheaper to run money in-house. It installed a regulated investment board that allows it to buy and sell securities without pre-approval from trustees or having to pay consultants.
Full Content: Bloomberg
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