Fund Merger Analysis
The trustee of an industry superfund approached Parity Analytic to assist it to evaluate a number of strategies for increasing scale and reducing costs to its members via lower MER (Manager Expense Ratio). The Fund engaged Parity to analyse the impact of a number of potential initiatives, including:
- Renegotiation of the fee structure with its administrator
- Renegotiating external manager fees
- Providing management services to other funds
- Increasing funds under management via a merger or extended public offer
Parity worked closely with key staff across the organisation to develop an understanding of key cost drivers for the fund. These were put together into a fund model which allowed the fund to scenario test the various strategies, including the impact of increased FUM on investment management costs, administration fees, and increased member numbers. The model was flexible to allow the analysis of various merger options including merger and extended public offer.
Parity worked closely with the fund to test various scenarios.
The fund used the model to assess a number of merger and EPO opportunities, eventually increasing FUM by almost 80% via merger with a corporate fund.