It should have been a joyous occasion, but FTSE deputy chief executive Donald Keith looked somewhat pained when he introduced the newly-created capital gains tax (CGT)-adjusted benchmark the index company has developed in partnership with the Association of Superannuation Funds of Australia (ASFA).
It was not because of jetlag, since Keith reportedly lives on airplanes and, therefore, should be conditioned to the havoc that breaching time zones has on a person's physiology.
But it was rather the recollection of the process of creating the benchmark and the problem of getting consensus within the industry on how to deal with CGT that caused him the discomfort.
He reflected on when FTSE launched the original after-tax benchmark, which excluded the effects of CGT, in September 2009.
"I very distinctly remember saying at that stage that it concluded two years' work on the trickiest and most difficult index development that I had known within my 12 years within FTSE," he said.
"Unfortunately the work didn't end there and today I'm really delighted to announce that we have completed an even more difficult development and that is the FTSE ASFA capital gains tax indices."
Keith's confession highlights the challenge that lies ahead in getting the industry to embrace after-tax reporting.
Since FTSE launched the first after-tax benchmarks, about $10 billion in funds under management spread out among 20 fund managers and three custodians is or will shortly be measured against the index.
In light of the size of the total super funds under management in Australian equities, this is not yet an overwhelming success.
The index company acknowledged it was a relatively small percentage in the bigger scheme of things, but also pointed out it was still early days.
The amount benchmarked and managed against the FTSE ASFA tax-adjusted indices would only grow as the industry moved towards after-tax reporting and portfolio management, the company said.
The issue is an important one. ASFA chief executive Pauline Vamos emphasised that transparency on investment outcomes was a decisive factor in how involved members were with their choice of super fund.
What is more, a greater emphasis on after-tax results is likely to result in improved investment performance.
"There was research done by Russell and basically they said that for the average superannuation portfolio their average performance could be increased by 25 basis points if they actually managed their portfolios a lot more efficiently and that efficiency was based on tax management as well as the broker fees," Vamos said.
She said she expected the launch of the new index, combined with the emphasis the Cooper review had placed on transparency in reporting, would stimulate a shift in the industry.
"At last [super] funds can say: 'Well, we've got a benchmark now. We want you to measure yourself against that'," she said.
"We are the biggest client. It is the only way we are going to change the funds management industry."
The new index also provides financial advisers with a tool to compare all super funds, not just retail funds, and this will eventually have a flow-on effect on fund managers.
"Funds that don't follow it, planners will say 'well, they are not transparent enough, we won't recommend them'," Vamos said.
But as the process of creating the means to enable the shift in reporting methods has shown, a change of this magnitude is unlikely to be achieved overnight.
Attitudes change slowly and it will take some time before the super dog will start wagging its funds management tail, rather than the other way around, as Jeremy Cooper once illustrated the status quo.
