Mercer has appointed Warakirri Asset Management to analyse the tax efficiency of its Australian shares managers following an increased focus on after-tax investment performance.
The company has no immediate plans for any further acquisitions of this type, but intends to focus on using Warakirri’s services.
“There is quite clearly a desire, coming from the Cooper review and more broadly from the industry, for increased focus on after-tax returns,” Mercer chief investment officer Andrew Howard said.
“Hence the appointment of Warakirri very much allows us, within the Australian shares portfolio, to specifically assess the explicit tax efficiency of each of our underlying managers as a result of the customised approach that we’re going to be utilising through the appointment of Warakirri.”
Howard said in terms of future plans, there was likely to be further work required in the area of after-tax reporting.
“This basically allows us to essentially prepare for that and in the meantime ensure that we are very much focused with each of our underlying managers on identifying the most efficient after-tax result that we can,” he said.
“There are certainly no plans for any further appointments at this point in time.”
Last year’s Cooper review highlighted after-tax investing as an area that investment managers and trustees should give more attention to, he said.
Mercer recently called for the focus on investment performance to shift from the traditional pre-tax returns to risk-adjusted, after-tax returns.
“This service will create a more level playing field when considering performance by providing ongoing reporting against customised benchmarks and a more accurate reflection of each manager’s tax efficiency. Ultimately, it’s about identifying the best investment performance, with the most complete data available to us,” Howard said.
