FTSE Group “FTSE” and ASFA (Association of Superannuation Funds of Australia), today announce the expansion of the FTSE ASFA Australia Index Series to provide superannuation funds with an additional set of industry standard after-tax benchmarks. These unique indices include the effects of capital gains tax, in addition to the effects of franking credits and off-market buy-backs.
Since the 2009 launch of the original FTSE ASFA tax-adjusted indices which include franking credits and off-market buy-backs, a significant number of superannuation funds have supported the need for a benchmark which also includes capital gains tax in order to facilitate after-tax assessments on a far more granular level. The structure of the series now provides greater flexibility, enabling superannuation funds to select the after-tax benchmark that best suits their requirements, whether it’s franking credits, participation in off-market buy-backs, capital gains tax, or all three.
Donald Keith, Deputy CEO of FTSE, comments: “FTSE’s focus on developing tailored benchmarking solutions is the foundation of our partnership with ASFA which resulted in the first ever standardised measure for Australian superannuation fund after-tax reporting. The addition of capital gains tax comes from our commitment to continually seek to engage with the market and respond to feedback to ensure the indices continue to be the optimal tool for the Australian superannuation community.”
Pauline Vamos, CEO of ASFA, comments: "The continued development of the benchmark is an example of what the industry can do to help drive reform. After-tax reporting is of growing importance, given the Government's Stronger Super proposals around setting investment strategies with regard to the after-tax outcomes. The outcome of the Stronger Super reforms is to create a set of objective criteria to benchmark superannuation funds; these indices are clearly part of the solution. This additional set of after-tax benchmarks bring further clarity to market performance and will assist trustees in providing better investment performance for members. The development of this benchmark demonstrates the technical expertise of FTSE and the FTSE ASFA Australia Index Advisory Committee."
David Hartley, Chief Investment Officer, Sunsuper comments: “In a time when everyone is talking about fees and costs it is worth remembering that the biggest amount of money that goes out of members’ accounts is in the form of tax. Managing tax outcomes is essential and I welcome the moves of FTSE and ASFA to develop this useful benchmark to help trustees achieve this aim”.
Leigh Watson, Executive General Manager, Asset Servicing, National Australia Bank comments: “We recognise the huge advances FTSE and ASFA have taken towards providing the industry with comparative tools in such a complex environment and NAB was the first custodian to utilise the original FTSE ASFA tax-adjusted indices with franking credits and off-market buy-backs. Our analysis on super funds and managed investment schemes has shown tax expenses, in some cases, can represent over 70% of overall expenses and this has shed new light on the importance of effective tax expense identification and management compared to other more traditional methods of expense reduction.”
The FTSE ASFA Australia Index Series is designed primarily for benchmarking purposes but its liquid and tradable nature means it can also be used as the basis for the creation of index-linked products such as Exchange Traded Funds (ETFs), structured products and other derivatives.
The series includes non tax-adjusted indices in addition to after-tax versions and excludes CHESS Depositary Interests (CDIs) and investment trusts, providing investors with a clear representation of the Australian equity market. Moreover, FTSE can meet the requirements of specific mandates or products by customising either the indices or the after-tax methodology.
More information about the FTSE ASFA Australia Index Series is available at www.ftse.com/australia or www.superannuation.asn.au