White Papers

Tax effective investing


Greg Cooper

Greg Cooper

CEO Schroders Australia / Global Head of Institutional

After tax investing has become one of the buzz topics for superannuation funds (and retail investors). However, much of the mainstream media debate has focussed on the after tax effects of an Australian equity portfolio from an Australian unit-trust holder’s perspective - a view that bears little, if any, resemblence to the situation from a typical Australian institutional investor’s (especially superannuation funds) perspective. In addition we have also seen the active promotion of "Emulation" strategies in Australian equities for the larger multi-manager funds, again largely under the premise of tax effectiveness. 

Tax effective investing is at its heart a relatively simple concept but one that is complicated by type and tax position of investor, vehicle used for investing, asset class and geography invested and method of tax lot accounting.  In this paper we look to explore what tax efficiency means and its impact on institutional investors. We also look to expand the debate on tax effectiveness beyond Australian equities and into international equities and fixed interest. In particular we suggest strategies that really do make a difference to tax and those that make little difference*.

*The usual caveats apply:  Schroders is not a qualified tax adviser and the points raised in this presentation are our own opinions and interpretations and do not constitute tax advice.  Readers should obtain their own independent expert opinions.

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