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This decision seems contrary to what an individual investor would do. The individual wants the best post-tax returns possible as that is the amount they get to keep for themselves. This focus has led to the establishment of many tax efficient managed funds being promoted in New Zealand including passive/index funds, Australian unit trusts and UK-based Open-Ended Investment Companies.
The tax efficiency means that investors pay as little tax as legally possible.
One of the most successful fund types has been the passive international share funds such as AMP Henderson’s WiNZ, Tower’s Tortis International and an offering from Bank of New Zealand.
However, Guardians chairman David May told SuperTalk that the New Zealand Superannuation Fund wasn’t looking at using a passive international share fund with a binding ruling like these three funds, as the tax-free status wasn’t necessary.
May says the NZSF is aiming to maximise returns for the ultimate benefit of the government (and taxpayers).
“The government will benefit from the fund’s total returns, including any taxes that will be paid by the fund on its investment income.
“For this reason the fund has focused on pre-tax performance,” he says.
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