POWERED BY MOMENTUM MEDIA
Super fund members to reap benefits of after-tax focus
Super fund members could bank additional returns on taxable accumulation accounts due to a new focus on after-tax investing a Russell Investments survey has found.
Recently introduced Stronger Super reforms includes a mandatory requirement for funds to focus on after-tax returns as part of their investment strategy.
Pre-tax performance can under-estimate the value members gained off franking credits from Australian equities, Russell said - conservative fund members could add 45 basis points, balanced option members 65 basis points and growth option members 80 basis points when franking was taken into consideration, according to the study.
Large cap managers generated additional alpha from franking of 27-53 basis points on average annually while franking added 1.1 per cent to superannuation accumulation and 2.2 per cent for pension returns on average.
Russell Investment director of after-tax strategies, Raewyn Williams said the results confirmed the benefit of introducing mandatory consideration of after-tax investment returns for super funds under new legislation.
Additionally, it would support like-for-like comparisons between funds, Russell said.
However Williams said after-tax investing was not standard practice among fund managers.
"Focusing on the end goals that matter to members - after tax returns - portfolios can be holistically designed, constructed and managed to take into account the impact of tax," she said.
The survey also found that tax could mask real performance as some active managers appeared to be underperforming the market on a pre-tax basis but actually returned or beat the market on an after-tax basis.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Super funds have built on early financial year momentum, as growth funds deliver strong results driven by equities and resilient bonds.
The super fund has announced that Mark Rider will step down from his position of chief investment officer (CIO) after deciding to “semi-retire” from full-time work.
Rest has joined forces with alternative asset manager Blue Owl Capital, co-investing in a real estate trust, with the aim of capitalising on systemic changes in debt financing.
The Future Fund’s CIO Ben Samild has announced his resignation, with his deputy to assume the role of interim CIO.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
76.97 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
76.46 3 y p.a(%)
3
UBS Solactive Global Pure Gold Miners UCITS ETF Dis USD
51.13 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
45.15 3 y p.a(%)
5
Select Baker steel Gold Institutional
43.78 3 y p.a(%)
