Analysis of added value

We analyse and optimise management fees by comprehensively comparing performance, risk and costs to our client with the values of comparable asset classes or investment strategies (composites). When costs deviate from the optimum, the adequacy of costs is analysed and critically questioned by comparing costs with added value.

Within infrastructure costs often adjustment of processes and the use of economies of scale can create significant pricing advantages without changes in quality. This can be especially relevant in alternative investment strategies where substantial improvements are often possible.

The optimisation of transaction costs is also based on benchmarking. Initially we measure costs on the basis of order data with exact time stamps. In order to determine implicit cost elements we compare the order data against tick-by-tick market data and quotes. The costs identified for an investor (custody bank fees, brokerage fees, transaction taxes, spreads, market impact and waiting costs) are compared to peer group data, which results in a report with suggestions for optimisation.

The optimisation process is based on measured cost, the identified cost drivers and peer group comparison. When optimising explicit transaction costs the quality of services and research is always considered. When optimising implicit transaction costs the quality of the actual execution in the market is improved (best execution), by creating concrete trading policies.

With the competence and knowledge of XTP we draw from many years of expertise in measuring, analysing and optimising transaction costs for bonds, equities, currencies and derivatives.