Outsourced TCM

For many investors, outsourcing TCM represents an attractive option, especially in the first year of monitoring costs. Our four-phased approach switches the overall project emphasis from initial measurement of costs to end result.

Phase 1 - Measurement

TradeShare will measure visible costs (such as broker commissions, research commissions and other charges) and invisible costs (spreads, market impact, timing, opportunity costs and price appreciation).

These costs have an enormous effect on the bottom line returns, often ranging from 80 bps (basis points) to 140 bps. Measuring such costs gives the investor a greater understanding of where alpha is gained or lost within the trading cycle.

See TradeShare TCM for Investors for more detail on measurement.

Phase 2 – Reporting

Outsourcing the preparation of reports is dependent on internal circumstances. While some larger investors have someone that dedicates a significant amount of time to tracking costs, others do not.

Although reducing  transaction costs is a very beneficial to the fund, the reality is that adding an internal measurement, monitoring and reporting roles to an already demanding workload is difficult. Employing TradeShare to carry out the reporting duties will all but eliminate any time required by an investor.

TradeShare reports will translate trading cost data into meaningful information so better investment decisions can be made.

Report delivery is available online, in PDF or hardcopy format.  

Phase 3 - Fact Finding With The Manager(s)

Starting with accurate and correct calculations, followed-up with an understanding that some costs are unavoidable, dialogue with the managers can prove extremely beneficial. However, history demonstrates that the majority of investors find it very difficult to effectively discuss transaction costs with their managers.

Pending results from Phase 1 and your assessment as to whether or not you can carry out this task, we are able to offer our services in discussing the results with  the manager(s).

We feel strongly advantaged to do this work because:

§         We are truly independent of ties to any lending, investing or other consulting businesses. Cost measurement is our specialty and therefore other work, such as fund manager selection lists, will not influence our fact finding meetings with the manager(s).

§         We have been very careful to remain un-opinionated about fund manager activity/behaviour and have relied on statistical information derived from the system as a means to highlighting costs.

§         TradeShare calculations are based on actual data from the managers instead of assumptions. The acceptance of our methodologies in combination with our on-going dialogue with most trading desks, means that we are less likely to experience resistance.

§         Having built a system with much input from the fund managers, it has been our experience that they are willing to reverse any trends that demonstrates poor execution.

Phase Four – Monitoring

By continuing to monitor the trading costs trustee and committees will be able to measure the effectiveness of TradeShare’s involvement and/or the fund managers willingness to reduce identified costs.