State Street will provide fund accounting, crediting rates, unit pricing and taxation services for the three funds and will assist in providing data required by the Australian Prudential Regulation Authority (APRA) under the Stronger Super reforms.
According to the three Queensland-based funds QEIC Super, Club Super and Mercy Super, this unique strategy of combining their funds under management rather than approaching the market individually has enabled them to access more competitive terms from potential custodians.
A spokesperson representing all three funds said there was a total of $1.9 billion of funds under management, giving them increased bargaining power. It also benefited the custodian as well, as they only had to deal with one party instead of three.
“The key was for all three funds to agree early on what we were looking for in a custodian. After that was settled, the process was quite smooth,” they said.
After a thorough tendering process facilitated by JANA, the funds unanimously chose State Street as their custodian. A spokesperson said that all three funds were "impressed with State Street’s capabilities – their advanced technology, their quality services and the enthusiasm of their people”.
State Street head of global services for South Asia and Pacific Ian Martin said super funds were under increasing pressure to merge as a result of regulatory changes and the need to minimise costs. However, he said there were many barriers to a successful merger, according to a recent study conducted by State Street.
“These three funds have developed an innovative solution – harnessing the benefits of scale while avoiding the issues commonly associated with a full-blown merger,” said Mr Martin.
