Empowering Plans to Possibly Improve Performance
Pension Plans utilize their Plan Consultants to assist with a number of fiduciary responsibilities, including:
- The monitoring and control of a Plan’s investment expenses (and, in particular, the expenses incurred by external Asset Managers); and
- The continuing obligation for an Asset Manager to seek Best Execution.
Both of these activities can have significant impact on a Plan’s investment performance and thereby merit special attention by both Plans and their Consultants. In so doing, special services can become available that have the potential to positively impact a Plan in one or both of these areas.
BOOMERANG Can Lower Commission Costs
BOOMERANGSM is a comprehensive service that has the potential to improve a Plan’s investment performance through the addition of “operational alpha”, that is, the possible enhanced performance generated by reducing operating expenses. Today, in order to maximize operational alpha, it is important to carefully monitor trading commission costs as they result in a dollar for dollar reduction in performance; therefore, consistent with best execution obligations, the fiduciary rationale exists to minimize commission costs wherever possible. BOOMERANG provides a Plan’s Asset Managers with a tool that has the potential to lower a Plan’s trading expenses through an automated and flexible process controlled by the Asset Manager and consistent with an Asset Manager’s continuing obligation to seek Best Execution for the Plan.
Asset Managers Control BOOMERANG
Asset Managers maintain complete control over BOOMERANG at all times and can dial BOOMERANG up or down to conform to either a Best Efforts letter from a Plan or as an Asset Manager’s desire to lower a Plan’s trading expense. If a Plan utilizes a Commission Recapture Program with an Asset Manager, the Asset Manager benefits from BOOMERANG’s automated and flexible trading process. In fact, BOOMERANG replaces the cumbersome and ineffective Commission Recapture process in order to potentially increase the Plan’s commission savings and operational alpha. BOOMERANG’s transparency creates a significant advantage for Plan Consultants and Asset Managers as they communicate the results of their Client Commission Mandates to Plan Senior Executives and Board Trustees.
Better Fulfill Fiduciary Obligations
In the end, BOOMERANG provides Plan and their Consultants with a level of transparency that also has the potential to enhance the operational alpha created by an Asset Manager. All parties work together as they strive to improve the investment performance of the Plan. The net result from BOOMERANG is that the Plan, their Consultants and Asset Managers are empowered to more properly fulfil their fiduciary obligation to control and monitor expenses.
BOOMERANG’s benefits vary with individual users and do not represent any guarantee of future performance or benefits. Market conditions, share volume, share commission rates, share availability, manager trading style, execution exchange and rule parameters used by the Manager can all impact and change the results achieved by BOOMERANG.
Bloomberg Tradebook is the exclusive technology licensor for UAT’s patented iPerX technology. Please see BLOOMBERG Tradebook Disclosures [Read More].