The impact of trading on pension fund portfolios

Transaction cost reports can mislead pension fund trustees, so how can they measure the impact of trading on their investments? Under MiFID II, since 1 January 2018, trading costs and execution quality have been reported by European asset managers, yet these numbers are widely considered to be a shallow reflection of trading quality, or even misleading.

For pension fund trustees, who are likely to manage multi-asset portfolios, the complexity of reports for trading across different instruments can be substantial. Rachit Sharma, investment director of RPMI Railpen and Carsten Just, head of fixed income trading at Nordea Asset Management discuss the role of trading in the investment process, outline how execution quality can be measured both quantitatively and qualitatively, and consider how trustees can use this information to make better decisions.

Published on February 4, 2021

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