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- FTSE consults with the market to meet Listed Investment Company community need for transparent after-tax performance reporting
- FTSE confirms its capabilities in providing after-tax benchmark and index solutions that meet the requirements of different types of investors
FTSE Group (“FTSE”), the award winning global index provider, today announces that it will be providing after-tax reporting and performance attribution to individual Listed Investment Companies (LIC) to support the LIC industry’s transition to after-tax reporting and measurement.
For the first time, Listed Investment Companies who have signed up to receive the data will be able to report both pre and post-tax performance attribution for investors across four tax brackets:
- Tax exempt investors
- Superannuation funds
- Investors in the mid-tax bracket
- Investors in the high-tax bracket
15 of the largest LICs have signed up to receive their individual after-tax performance data with more due to come onboard over the coming months. The LICs which have signed up include AFIC, Argo, Milton and Whitefield Limited. They have all been strong supporters of the industry’s move to be able to provide investors with meaningful and transparent after-tax reporting.
It was announced in November 2012 that the recently formed Listed Investment Companies Association of Australia Ltd selected the FTSE ASFA Australia Index Series to be made available to the LIC industry as an after-tax benchmark and had selected FTSE to provide a customized after-tax LIC Index, the FTSE ASFA Australian Listed Investment Companies Index.
Approved by the ASX, the FTSE ASFA Australian Listed Investment Companies Index represents the after-tax performance of investment entities listed on the ASX. It takes into consideration franking credits of the constituents and is calculated using a mid-tax rate of 31.5%. With the creation of the Index, the LIC industry now has an index which accurately reflects the benefits of franking as well as the impact of tax on investment transactions.
John Caulfield, Senior Research Associate, FTSE Group, Australia comments: “We are pleased to provide the LIC community and individual LIC’s with a highly granular level of after-tax reporting. The LIC community now has the ability to accurately attribute franking credits and investment returns, as well be measured against a reliable and transparent after-tax benchmark.”
Angus Gluskie, Chief Executive Officer of Australia’s oldest listed investment company, Whitefield Limited, speaking on behalf of the Listed Investment Companies Association of Australia Ltd, comments: “The FTSE ASFA Australia Index Series provides LICs, research groups, investors and their advisers with a high level of insight not only into investment performance but also into the associated taxation implications, particularly the benefits of franking.”
Geoff Driver, General Manager Business Development and Investor Relations from Australia’s largest LIC, Australian Foundation Investment Company Limited, added: “The introduction of this index further reinforces the value of the investment approach taken by LIC’s which includes the impact of tax in their investments decisions. After-tax investment outcomes are now a strong focus for many advisers when providing advice to their clients”.
The development of the FTSE ASFA Australia Index Series began four years ago in partnership with ASFA and in conjunction with the Australian market. 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.
The methodology has been approved as a standard by an independent committee, the FTSE ASFA Advisory Committee, comprising senior level investment practitioners from superannuation funds, asset consultants and investment managers, custodians and tax specialists.
