Superannuation funds can save considerable costs in a merger process if they initiate transition management discussions early on in the process, according to Russell Investments.
But currently these discussions are often only started towards the end of the process.
"There doesn't seem to be a whole lot of direct transition management involvement," Russell Investments head of transition portfolio management Adam van Ness said.
"At this stage, it seems the plans are to consolidate, or getting themselves under the same legal umbrella, and then we will review all the different options across all the underlying constituents.
"I think the transitions are probably becoming a little bit later stage."
Van Ness argued that an early start to transitioning assets could benefit the negotiation process on the redemption of securities.
"We might actually go down the path of redeeming in kind the underlying securities, as opposed to telling them that we want cash. There may be a 60 basis points spread charge on taking cash out," he said.
"If you can move the securities out and that gets you closer to your objective, if you can move them out at zero spread, then often times that is going to be cheaper for the super fund.
"The earlier you can get in and have those conversations with the ultimate asset owners, we definitely find there are better outcomes for the underlying constituents.
"You can have those discussions with the unit trusts, you can have those discussions with the super's custodian and it gives everybody more time to lay out a better, cheaper alternative for the underlying constituents."
He said the cost savings would differ from fund to fund, but would be higher the earlier discussions around transitioning assets started, sometimes saving tens of basis points.
