AvSuper has made an allocation to the AllianceBernstein Franked Australian Value strategy in a move designed to improve after-tax investment returns.
Using the FTSE ASFA Australia 300 Index – Tax Exempt as its benchmark, AllianceBernstein focuses on the top 150-170 Australian stocks and has been managing the strategy for almost six months.
The strategy draws on both quantitative and fundamental research insights to create a portfolio of best ideas. The fundamental research focuses on a company’s long-term earnings capability and in particular the value of cashflows in the five-year path to normalisation.
AllianceBernstein believes its fundamental research can make a large contribution by anticipating patterns in franking yields, including the ability of companies to generate higher franking yields year after year.
It said that share prices at the moment do not reflect these forward-looking insights because the market tends to focus on the pricing of franking credits only when dividends are paid.
AllianceBernstein Australian Value equities co-chief investment officer Roy Maslen said Franked Australian Value was the best overall offering the firm had for clients who can use franking credits.
“The after-tax enhancements build on the strengths of our Australian Value strategy given that, in our view, conditions for value investors have rarely been as attractive in Australia as they are right now,” Maslen said.
