Tax-managed responsible investing reaps investment returns

12 November 2020
| By Jassmyn |
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Responsible investing should be implemented in a tax-managed way for superannuation funds, according to Parametric.

In its research paper, ‘Tax-managing a Responsible Investing Portfolio’ the firm said tax-managed responsible investing sat within the regulatory framework of super funds and the responsible idea of funds managing their stakeholders, including fund members and the tax office.

“The principles embody our description of a tax equilibrium superannuation funds must strike between their ‘responsible’ tax citizenship obligations and the very real stake fund members have in funds managing the tax implications of their investment decisions well,” it said.

“The opportunity is for superannuation funds to bring a neat, holistic coherence to their own two-sided (tax) stakeholder management as funds holds companies to account around the same principles.”

Parametric noted that while the risk was rewarded in terms of investment performance, the year-on-year journey could be bumpy.

“For a superannuation fund prepared to take on active risk to implement Responsible Investing, it seems an easy and useful extension to add a much smaller risk budget to pursue Responsible Investing in a tax-managed way, with results that are smoother, measurable and more immediately harvestable,” it said.

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