BUSS(Q)is negotiating with its Australian equities managers to rescind pooled trust investments and move into mandates with after-tax benchmarks.
David O’Sullivan, chief executive of the $1.5 billion Queensland-based building industry fund, said the motivation behind introducing after-tax benchmarks was to force managers to consider the erosive effects that tax can exert on returns, particularly during stock sells and share buybacks. “We want them take into account the impact of crystallisation of capital gains tax,” O’Sullivan said. Among the Australian equities managers currently running BUSS(Q) money are: Warakirri Asset Management ($110 million), Investors Mutual ($90 million), Barclays Global Investors ($75 million), Perennial Investment Partners ($75 million), Macquarie ($50 million) and Perpetual Investments ($50 million). The fund was not intending to terminate any existing arrangements with the managers, O’Sullivan said. With the exception of Warakirri, which began investing against after-tax benchmarks in July, returns from these managers’ trusts are measured on a pre-tax basis. O’Sullivan said the fund was considering keeping its existing allocation to Warakirri’s trust, given its existing after-tax process. The negotiations had begun last week with Investors Mutual the first manager in dialogue, O’Sullivan said.
As super fund CIOs return to work for 2025, all eyes are on two things: Donald Trump’s presidency, and inflation. But they’re not the only issues that will drive investment decisions and returns, and some of them may present an unfamiliar set of challenges for a cohort of investment professionals that has grown up experiencing a particular set of market and economic conditions.
Simon HoyleJanuary 7, 2025
