Blindly trying to capture tax efficiency can lead to poor decisions, admits Justin Wood, head of strategic solutions and client advisory group at Barclays Global Investors. Wood says that there are many factors beyond the manager’s control, such as whether a fund is growing, stable, or declining, or whether a sudden draw down forces some capitalisation, that can have tax implications and need to be worked out. “That’s why IFSA’s recommendation is a guidance note and not a standard,” he says. “It will require some testing.”

Robin Bowerman, principle and head of retail at Vanguard, adds that after-tax regulation hasn’t changed the way money was invested in the US, it has just meant that investors now have more information. “[Despite the direction of the US] we’re not convinced after-tax reporting needs to be regulated – nobody wants extra regulation – but if the clients, especially the super funds, are demanding it, then the fund managers will doubtlessly comply.”

Bowerman says that after-tax reporting is not supposed to be an indictment on high-turnover managers such as hedge funds. “These managers still have a place in the portfolio; knowing the tax implications can help investors decide how they fit,” he says.