A year on from appointing its first chief investment officer, Vision Super has reduced the operational management expense ratio (MER) by 42 per cent and the investment MER by 25 per cent.
Michael Wyrsch was appointed with the expressed mandate of reducing the investment costs with its custodian (National Australia Bank), its investment consultant (Frontier Advisors) and its fund managers.
Operational MERs were reduced from 47 basis points in 2012/13 to 27 basis points in 2014/15, and investment MERs from 88 basis points to 66 in the same period, with the $7 billion fund saying further reductions are achievable.
Vision Super said a member with an account balance of $100,000 will see their fees reduced by $320 per year as a result of the focus on cost reduction. Over a twenty year period a member in the Balanced Growth Option would be $15,000 better off.
Vision Super’s chief executive, Stephen Rowe, said in a press release that lowering MERs had been a priority for the fund.
“We’ve taken a deliberate and methodical approach to reducing costs,” Rowe said.
“One of the first things we did was to benchmark what we were paying against the market. We reviewed our financial statements and outsourced provider arrangements, and compared them to other funds.
“Then, we set about renegotiating with our major providers.
“We are extremely pleased with the result we have achieved on behalf of our members. And we believe we can continue to achieve savings that benefit our members, through an ongoing focus on cost reduction and cost maintenance.”
Rowe said the cost reductions are occurring as the fund delivers strong investment performance.
Its default balanced growth option returned 9.18 per cent over the past years, 12.77 per cent over three years, and 9.62 per cent over the past five.
He said the fund had ushered in a new investment philosophy in the past year.
“We’ve taken a refreshed approach to investment, pursuing a dynamic asset allocation strategy.
“This, combined with our determination to be cost conscious and efficient, is helping Vision Super deliver more for our members,” he said.