Russell’s Williams gave a presentation at the firm’s 2010 annual investment summit last month, where she used an extended analogy between wine tasting and after-tax investing. One of the after-tax investing approaches ‘tasted’ at these presentations was the custodians’ offering, referred to as ‘propagation’. With propagation, tax parcel selection is done at the widest possible level, across different accounts within a super fund’s portfolio, to choose tax parcels with the lowest taxable gains on trades. The custodian nets off all the fund’s trades at the end of the period, so that those which may have attracted more tax are offset by those which would have paid less. Russell was also a pioneer of emulation services, whereby a fund appoints a “master manager” to trade more efficiently on its managers’ daily buy and sell decisions. Williams says that Russell’s emulation strategy has, since inception, demonstrated some innate tax efficiencies, including producing only half the turnover of a standard multi-manager strategy. However Williams offers a cautionary note for super funds. As with ‘good’ and ‘bad’ wine, the after-tax investing process needs to be put into context with a budget, the sophistication of the tasters and whether it is a match with the food. That is, the budget and resources of the fund, the sophistication of its management and whether the process is a good match with the portfolio structure and reporting framework.