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November 1, 2019

‘Drip, Drip’: The Case for Controlling What You Can Control

Amid a drought crisis, many Australians have become stewards of responsible water use. Though we can’t change the weather, we can control what we can control—but can the same be said for superannuation funds who face harsh investment conditions?

This paper discusses whether superannuation funds should respond to the current state of investing with the same stewardship that many Australians have applied to the drought crisis. With yields at historic lows, alpha scarcity, market volatility, and bearish pundits, controlling what you can control in your investment portfolio seems like a logical move. As with water, it may be the most responsible thing a fund can do as it stewards the retirement savings of its members.

Though much has been written on what superannuation funds should be doing to control fee levels, the risk of discarding good investment ideas to reduce headline fees remains a valid concern. Instead, we focus on two types of controllable portfolio costs that are often overlooked by industry professionals—taxes and transaction costs. We provide evidence that a programme to manage these cost—which can be grouped under implementation efficiency—can deliver meaningful benefits to members.

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Raewyn Williams

Head of Research
Australia & New Zealand

+61 434 372 210
Raewyn Williams