The Association of Superannuation Funds of Australia (ASFA) has launched a new after-taxation benchmark, created by index company FTSE, that it will use as an industry standard and measure MySuper products against.
The new index, the FTSE ASFA Australia 200 Index - Superannuation CGT, measures the price performance of the 200 largest companies listed on the Australian Securities Exchange, and includes the effects of franking credits, off-market buybacks and capital gains tax (CGT).
The peak superannuation body already had an index that measured on an after-tax basis but it did not include CGT.
ASFA chief executive Pauline Vamos said super funds would be able to use the benchmark to force fund managers to report their performance more closely in line with member outcomes since taxation was the main cause of investment performance leakage.
"I want it to become the industry standard. It gives funds the ability to make changes in fund managers," Vamos said.
"Measuring investment performance is one of the hardest things to do, but one of the most important things to know.
"There is an enormous pressure on funds to be transparent, and if funds are not transparent and don't provide information to members on after-fee and after-tax returns and there was a benchmark to measure how they go on that, people will lose interest. We know that."
She said ASFA had already been in discussions with Chant West and SuperRatings about creating league tables that measured on an after-tax basis.
However, she said fund comparisons should really be driven by the prudential regulator.
"APRA (Australian Prudential Regulation Authority) will have to start the league table and MySuper will be the starting point. It will measure the investment performance of the MySuper portfolio on an after-tax and after-fee basis," she said.
The FTSE ASFA Australia indices are not just benchmarks, but are tradeable and liquid instruments and FTSE indicated it would create exchange-trade funds (ETF) on the back of the indices.
"We have interest right now in ETFs and we are in serious discussions and negotiations with organisations, and within a few months we will see ETFs off of the FTSE ASFA index series," FTSE director Julie Andrews said.
