Australian Catholic Superannuation and Retirement Fund (ACSRF) has appointed the US investment manager Parametric to implement a tax-managed indexing (TMI) strategy for a portion of its international equities portfolio. It is Parametric’s first Australian client to adopt the TMI strategy.
ACSRF, which has around $7 billion in assets and about 93,000 members, awarded Parametric an international equity after-tax passive mandate following a formal due diligence and rating process by Towers Watson and ACSRF’s internal investment team.
ACSRF’s chief executive, Greg Cantor, said: “We expect that working with Parametric will improve our members’ net returns. It is becoming increasingly important for superannuation funds to seek out new solutions to bolster the net, not just the gross, investment returns that members will benefit from in retirement.”
Parametric launched the TMI strategy in Australia in April 2015.
It is designed as a substitute for a superannuation fund’s existing passive strategy, providing exposure to the fund’s chosen benchmark index, but using an after-tax investing focus with the aim of generating better after-tax returns than traditional pre-tax strategies.
Chris Briant, chief executive officer of Parametric, Australasia, said: “TMI broadens the after-tax suite of offerings we have for super funds. Those with an active investment vision can get custom tax-managed centralised portfolio management (TM CPM) and those with a more passive objective can get our TMI approach.”
Super funds can also incorporate factor exposures into their equity strategy and implement screens, using Parametric’s capacity to implement customised portfolios to meet clients’ individual specifications.
The TMI strategy also provides clients with after-tax benchmarking and performance reporting to provide full transparency into portfolio outcomes on a before and after-tax basis.