In a move signalling greater tax awareness among superannuation funds, Sunsuper has benchmarked a $700 million Australian equities mandate to the new FTSE ASFA index, which incorporates the impact of capital gains tax (CGT) upon the performance of the largest 300 listed companies.

The big mandate, awarded to Morry Waked’s Vinva Investment Management, was the first that Sunsuper has signed with specific after-tax performance outcomes in mind, David Hartley, CIO at Sunsuper, said.


It followed the $17 billion fund’s take-up of tax propagation, which aims to prevent unnecessary CGT losses, through custodian NAB Asset Servicing. Hartley said that Sunsuper had also begun approaching other mandated Australian equity managers to discuss measuring their performance on an after-tax basis.

He said the Vinva mandate — for an actively managed, low-tracking error strategy — should incur low-to-moderate turnover and therefore trigger fewer CGT losses.

“Tax considerations can be put into their models. It’s taken into account more automatically when decisions are being made to buy or sell stocks.”

Hartley’s investments team also includes a full-time taxation specialist in Michael Longes, who was a former international tax partner with Ernst & Young and later worked for superannuation administrator CitiStreet.

When Sunsuper bought Citistreet in 2008, Longes was “quickly absorbed” into Hartley’s team to provide insights into the tax implications of investment strategies, and also the fund structures used by funds managers overseas.


Join the discussion