POWERED BY MOMENTUM MEDIA
Super fund mergers a tax ‘perfect storm’
Rationalising equity fund managers and strategies in merged superannuation entities may create inefficiencies and heighten tax transaction costs which will ultimately affect members, according to Parametric.
Commenting on the potential merger of more of Australia’s superannuation funds, Parametric managing director of research, Raewyn Williams said customer urgency for super fund disciplines that deliver transparency and efficiency was high in the current environment.
“Super fund mergers create a need for a legacy-to-target portfolios pathway. The pathway is far from frictionless and these frictions are real costs to fund members,” she said.
“The combination of merger-driven portfolio rationalisation, strong equity performance with embedded gains and a pre-tax investment and transition focus could create something of a ‘perfect storm.’”
Williams said the predicted consolidation activity could cost super fund members in the long run, as implementation inefficiency was at its most probable throughout that period.
“Most equity fund managers offer suer funds very little transparency around what they pay in brokerage and foreign exchange commissions. Add to this no visibility as to tax costs,” she said.
“The fact that these portfolios are typically spread across a number of fund manager sleeves makes it even harder.”
Better consideration for how funds speculating a merger would manage the taxed transaction costs of multiple managers and strategies within a potential combined business was also touted as vital.
“In a change environment like a super fund merger, the stakes will logically be much higher,” Williams concluded.
Recommended for you
Governor Bullock took a more hawkish stance on Tuesday, raising concerns over Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
