REI Super, the industry fund for the real estate profession, has reappointed Ibbotson Associates as its implemented investment consultant for a further three years.
Mal Smith, chief executive of REI Super, said his fund strongly valued Ibbotson’s depth of capabilities and expertise.
In particular, he lauded Ibbotson’s creation of the Premium Income option for members, which provides secure income and reduced investment volatility for members near to or entering retirement. “This has done very well so far, having outperformed its investment objectives,” he said.
REI was assisted by SuperRatings in the due diligence process for the reappointment.
The announcement follows several days after a study by Deloitte challenged the general worth of implemented consultants.
The study looked at the investment performance of six major implemented asset consultants over five years to June 30, 2014 and found that only half of the consultants appeared to add value over a passive benchmark.
The analysis compared the average fee of around 0.75 per cent of assets for an implement consultant with the 0.35 per cent fee for the Vanguard Growth Index Fund, an example of a cheap diversified passive fund.
Stephen Huppert, a partner at Deloitte, noted that for those implemented consultants that did add value over the passive benchmark, much of that would have been eroded through higher fees for active management. He called on funds to negotiate better fees.
“The market for investment services is competitive,” he said. “Industry consolidation is increasing the buying power of funds and it makes sense to exercise that power in negotiating fees substantially lower than rack rates.”