A $7 billion industry superannuation fund has appointed US investment manager Parametric to manage a portion of its international equities portfolio.
The Australian Catholic Superannuation and Retirement Fund (ACSRF) will be the first Australian client to adopt Parametric's tax-managed indexing (TMI) strategy. The international equity after-tax passive mandate was awarded following a due diligence and rating process by Willis Towers Watson and ACSRF's internal investment team.
ACSRF chief executive Greg Cantor said a motivation behind awarding the mandate was improving member's net returns. The fund has about 93,000 members.
"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," Cantor said.
Parametric Australasia chief executive Chris Briant said Parametric has been managing passive portfolios with an after-tax focus in the US since 1992, and saw the need for Australian super funds to balance both their appetite for more passive investment styles with the need for a genuine after-tax investment focus.
Parametric launched the TMI strategy in Australia last year and 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 a genuine after-tax investing focus with the aim of generating better after-tax returns than traditional pre-tax strategies.
Briant said super funds can also incorporate factor exposures into their equity strategy and implement screens, using Parametric's capacity to develop customised portfolios.
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.
The latest Parametric mandate follows LGIAsuper recently announcing it will use the firm's centralised portfolio management (CPM) strategy for Australian and international equities.
It is often said by equity managers with a mandate to scour the entire globe for investment ideas that getting the geographic allocation right in any given year is the most important driver of returns.
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