Cbus cut the investment costs on its $31 billion fund from 77 to 63 bps in the past financial year.

Scale benefits from renegotiating fee structures, manager consolidations, savings identified through working with new custodian JP Morgan and the diminishing size of a private equity fund of funds portfolio have all led to the cuts.

David Atkin, chief executive of Cbus,  foresaw a continued decline in such costs, with a 30 per cent reduction targeted over the next four years.

The fund has been increasingly successful in capturing scale benefits for members and is supportive of the concept of moving away from paying fund managers percentage based fees, partly through working with its consultant Frontier Advisors, whose director Fiona Trafford-Walker has agitated for change on this issue.

In common with many investors, Cbus believes that for many investment strategies, a fund manager is simply taking ever larger profits without any extra work as assets grow once a certain scale has been achieved.

Atkin said “I think the game’s up in terms of the current fee structuring, because they are not doing any extra work, but they are getting a system that delivers more and more profits.”

Privately, he has spoken to many individuals in fund management who agree with him that the model is out-dated.

“Unless fund managers come to the party on that you will find more strategies by funds to actually bring things in-house, because they are being frustrated by the lack of innovation on the managers’ part,” he said.

Trish Donohue, executive manager, investment management at Cbus, also credited the technology and access to the global skills of its new custodian JP Morgan as playing a part in reducing investment costs.

While a change in strategy towards greater co-investments is leading to a smaller reliance on private equity fund of funds, which two years ago represented 8 per cent of the fund but around 30 per cent of its fee budget.