Colonial First State Global Asset Management (CFSGAM) has said its tax-aware investment team’s mandates have topped $400 million from three industry superannuation funds.
“We believe tax-aware investing is important to align fund manager performance with the superannuation members’ benefits,” CFSGAM head of the Australian equities core team Matthew Reynolds said.
“We do see it as a growth avenue for our business going forward.”
Reynolds said the investment team of 19 people treated tax as a transaction cost. He said the team aimed to integrate franking credits and capital gains tax management into the investment strategy from the beginning, when investment decisions were made.
The approach also focuses on generating alpha.
Reynolds said BHP Billiton’s US$5 billion off-market buyback and the high franked dividend component locked up within it were recent examples.
“The tax-aware funds participated – albeit they were subject to the scaleback that all investors were subject to – but the impact on the performance was quite good in the sense that the post-tax performance pick-up was about 20 basis points for the funds that participated,” he said.
“We think that’s a very good example of where our tax-aware approach can yield a result for investors.”
He said the core team planned to win more mandates.
“We have significant capacity within the Australian equities core business to take on business,” he said.
The Wholesale Australian Share – Core Fund is available on 12 platforms and wraps, including Colonial First State’s FirstChoice platform and FirstWrap, as well as Axa North, BT Wrap and Macquarie Wrap.
