- Resize text
- Print this page
July 11, 2011
Qantas Super first to adopt agency FX model
- Appoints Russell Implementation Services Inc. for agency FX solution; program could save Qantas Super in excess of A$1 million per year
SYDNEY, July 11, 2011 - Qantas Superannuation Ltd (Qantas Super), the Trustee of the A$6bn Qantas Superannuation Plan, has appointed Russell Implementation Services Inc. (RIS), a part of Russell Investments, to provide agency foreign exchange (FX) services. This initiative will provide Qantas Super with complete transparency around its FX trading costs and could deliver cost savings to its members in excess of A$1 million per year.
The arrangement will outsource Qantas Super's FX trades for active global equities and alternatives to RIS' global trading desk for efficient execution and settlement. RIS will manage operational risk and provide Qantas Super with comprehensive performance reporting tools.
Qantas Super's Chief Investment Officer, Andrew Spence, said the agreement demonstrates Qantas Super's commitment to enhancing member returns while adhering to strict FX governance processes.
"Implementation efficiency is a key focus for Qantas Super as we strive to deliver the best risk-adjusted returns to our members. We have undertaken extensive due diligence to quantify the costs associated with FX trade execution and to find a solution that delivers enhanced transparency and cost efficiency. Qantas Super believes RIS will be an ideal implementation provider given their depth of resources, expertise in agency FX and commitment to transparency around FX trading costs," Mr. Spence said.
Ian Battye, Managing Director of Russell Implementation Services, said the costs of FX trading had been under the radar for too long. Russell's analysis* of 40,000 FX trades shows the cost of FX transactions can be up to nine times higher than either investors or managers expect.
"Our research shows that many funds are unaware FX transactions can be so costly, and investors can't assume FX trades are being executed efficiently by their investment manager. In Australia, we see Qantas Super as a leader in this space for first monitoring and then taking definitive action for a long-term solution to stop performance drag on members' returns due to FX leakage. I'm glad Qantas Super is joining our other global agency FX clients in taking action to achieve best execution and enhanced transparency in FX markets," Mr. Battye said.
Russell's agency FX model has been operating since 2003 and is designed to cut FX transaction costs through a process that is a cost effective alternative to traditional FX execution services. The program has surpassed A$68 million in total savings on behalf of the Russell global equities funds as well as other institutional clients.
"The savings we have made across Russell Investments' funds underscore that we practice what we preach. Implementing an agency FX program provides investors with a quick, clear and easy solution to the challenges they're now identifying in the FX marketplace. Not only can this save them time and deliver lower costs, but it can also demonstrate their commitment to industry best practice," Mr. Battye concluded.
*Russell analysed 40,000 FX trades executed by investment managers with custodians and other foreign exchange counterparties between January 2008 and December 2009 on institutional assets totaling approximately A$23 billion.
About the Qantas Superannuation Plan
Qantas Superannuation Plan is one of Australia's leading corporate superannuation funds and is run for the benefit of current and former employees of Qantas Airways Limited and its associated companies. The Plan has been operating since 1939 and now has over 33,000 members and assets of approximately AUD $6 billion.