LGIAsuper appoints Parametric for tax managed CPM
Queensland local government superannuation fund, LGIAsuper, has appointed the US investment manager Parametric to implement a Tax-Managed Centralised Portfolio Management (CPM) solution for its Australian and international equity portfolios.
The CPM solution, involving assets totaling around $3.5 billion, is expected to be implemented by the end of April of this year.
LGIAsuper, which currently invests more than $9.5 billion in assets for around 90,000 members, uses seven Australian and nine international equity managers. Many of these managers will transition over to join the CPM portfolio structure.
LGIAsuper’s Investment Manager, Guy Rundle, says, “The decision to implement the Parametric CPM solution is based on its potential to improve after-tax returns for our members and to improve portfolio transparency in terms of transaction costs.
We are acutely aware that every dollar counts when it comes to growing members’ retirement savings. This is another way in which LGIAsuper is working to optimise the investment returns our members enjoy.”
As a holistic after-tax investing and reporting solution, the move to CPM also assists LGIAsuper in meeting its legislative obligation to focus on after-tax, rather than pre-tax, investment returns.
Chris Briant, CEO of Parametric Australasia, says, "We have seen the demand for our active and passive after-tax solutions building over the past few years. It takes time to work through understanding tax-managed CPM as a different type of investment structure, but as LGIAsuper worked through the process, the benefits became obvious.
Parametric research published last year (“The Road to Reward”) estimates that in general, a TM CPM approach can add between 50 and 90 basis points a year (pre-fees) to a super fund’s listed equities portfolio and analysis of LGIAsuper’s portfolio suggests that potential benefits within that range exist.”
LGIAsuper is Parametric's sixth Australian client and its second large superannuation fund to implement CPM. The first was the $7 billion Qantas Superannuation Plan that adopted the CPM structure in 2012 for its equity portfolios.
The Seattle-based Parametric is a leading U.S. asset manager specialising in investment solutions that promote implementation efficiency and a focus on after-tax returns, with $US152.7 billion in assets under management worldwide, including $US52.4 billion in tax-managed investment strategies.
Parametric Australia is a division of Parametric, based in Seattle, USA. Parametric is a global asset management firm that offers investors a variety of portfolio solutions, including after-tax equity (performance measurement and indexed portfolio management), centralised portfolio management and structured active strategies. Parametric is a majority-owned subsidiary of Eaton Vance Corp., one of the world’s most dynamic global asset management companies.
Parametric Portfolio Associates LLC (“Parametric”), headquartered in Seattle, Washington, is registered with the U.S. Securities and Exchange Commission (“SEC”) as an investment adviser under the U.S. Investment Advisers Act of 1940. Parametric is exempt from the requirement to hold an Australian financial services license under the Australian Corporations Act 2001 (Cth) (Corporations Act) in respect of the provision of financial services to wholesale clients as defined in the Corporations Act and the Australian Securities and Investments Commission's (“ASIC”) Class Order 03/1100. SEC rules and regulations may differ from Australian law. Parametric is not a licensed tax agent or advisor in Australia and this does not represent tax advice.