The after-tax universe is expanding as Russell Investments’ after-tax survey debuts this month with after-tax benchmarks underpinned by GBST and S&P/ASX indices.
Russell Investments director of after-tax investment strategies Raewyn Williams said having GBST Quant provide after-tax benchmark data for the first release of the survey was a welcome inclusion.
Williams said that “after being approached by many participants in the industry, we saw a need to provide this survey, which complements our existing after-tax consulting and product offerings”.
“We’d intended looking at including benchmark provider data down the track, but are delighted that we can include these benchmarks from GBST in this first release of the survey,” she said.
GBST quant division head Kathy Taylor-Hofmann said the provision of after-tax benchmark data for the survey broadened the level of information available in the after-tax space.
S&P Indices channel management director Simon Karaban said there were numerous reasons for the customisation of benchmarks.
“After-tax results are affected by the timing of the funds’ tax lots and by the timing of the entry of individuals into the funds,” Karaban said.
“There are a lot of variables. The cash flow of the fund manager can affect the rates, as can the investor’s tax rates in the accumulation or pension stage. Whether franking credits are reinvested affects rates, as well as pre- and post-liquidation, and the merger of funds also affect rates.”
FTSE, as the provider of the first industry-standard after-tax benchmarks, would also be publishing its franking credit tranches of the FTSE ASFA Australia Index Series in the Russell after-tax survey.
FTSE Australia director Julie Andrews said: “We understand there is a need for customised benchmark solutions in some cases and FTSE is able to deliver this through FTSE Custom, which is focused on providing bespoke index solutions for clients.
“Some of the largest superannuation funds in Australia have mandated against the FTSE ASFA Australia Index Series, which captures over 90 per cent of the value of franking credits, dividends and buybacks. FTSE’s standardised benchmarks allow superannuation funds to easily compare their investment manager’s performance.”
Parametric managing director Scott Lawrence welcomed the survey as a “positive step towards shifting the focus from before-tax to after-tax investment and performance measurement”.
“This is crucial for taxable investors such as superannuation fund members, who ultimately receive and rely upon after-tax returns,” Lawrence said.
“Capital gains taxes are a very important potential cost to investors. These costs are particularly prevalent during periods of strong equity markets. Strong equity returns combined with portfolio turnover typically results in the realisation of capital gains and hence higher tax costs.”
