Qantas Superannuation has become the first Australian fund to outsource foreign exchange (FX) services to an agency provider and expects the decision to save it more than $1 million each year.
The $6 billion corporate fund hired Russell Implementation Services (RIS) to provide FX services for its active global equity and alternative investments. RIS aims to improve the fund’s visibility of trades by providing details of the exact date, time and cost of transactions as evidence of its attempts to execute at the best available prices.
Andrew Spence, CIO at Qantas Super, says in a statement that the fund searched for an agency FX services provider after quantifying the costs associated with trade execution.
RIS was launched in 2003 to service Russell’s multi-manager funds and was later marketed to other institutional investors. Since then it believes it has saved more than $68 million for Russell global equities funds and other institutional clients.
Underlying funds managers are often charged with FX responsibilities. Managers rely on custodians to transact with investment banks. Joe Hoffman, RIS director of FX trading, says investors are often unaware of the time or price of such FX transactions.
RIS takes FX responsibilities away from custodians. Hoffman says funds lose money when FX transactions are executed through a monopoly provider, such as a major custodian bank.
RIS sources liquidity from a global network of counterparties. Hoffman declines to reveal the number or type of RIS trading counterparties and also its number of clients.