FTSE Group (“FTSE”), the award winning global index provider, today announces VicSuper and Australian Ethical Superannuation, have chosen to adopt an after-tax benchmark from the industry standard FTSE ASFA Australia Index Series. Collectively the two funds have over $2.4bn Australian equity assets under management: VicSuper with approximately $2bn and Australian Ethical Superannuation with $410mn (as at 31 December 2012).
Both funds will be using the franking credit tranches of the FTSE ASFA Australia Index Series as the performance benchmarks for their Australian equity portfolios. This includes the effects of franking credits and off-market buy-backs to help manage the portfolio in a tax effective manner.
Oscar Fabian, CIO, VicSuper comments: “VicSuper believes that tax aware investing in Australian equities (through harvesting franking credits and by promoting lower portfolio turnover) can add significantly to our members’ investment returns. Using an after-tax benchmark is an effective means of ensuring our managers seek to generate alpha from franking credits.“
David Macri, CIO, Australian Ethical Superannuation comments: “We believe that having an appropriate benchmark will greatly assist us in measuring the success of our investment strategy which has a strong focus on maximising the after-tax returns for members.”
Julie Andrews, Director of FTSE Group, Australia comments: “We are seeing more and more funds benchmarking their Australian equity managers to the FTSE ASFA Australia Index Series as a recognizable and reliable after-tax benchmark series. This not only correctly aligns the interests of the managers with that of their members, it also enables trustees to comply with the MySuper legislation which requires fund managers to be measured on after-tax performance (where possible). This announcement is a continued endorsement of the FTSE ASFA Australia Index Series as the industry-leading after-tax benchmark for superannuation funds.”
The development of the FTSE ASFA Australia Index Series began four years ago in partnership with ASFA and in conjunction with the Australian market. Since its launch over 25 fund managers and custodians have signed up to use the FTSE ASFA Australia Index Series.
The series has expanded since launch to provide a full suite of after-tax benchmarks including franking credits, off-market buy-backs and capital gains tax as well as fully customized after-tax benchmarks. The methodology has been approved as a standard by the FTSE ASFA Advisory Committee comprising senior level investment practitioners from superannuation funds, asset consultants and investment managers, custodians and tax specialists.
