Simplicity switches out Vanguard for tax gain

DWS, which is majority owned by Deutsch Bank, is listed on the Frankfurt Stock Exchange and manages more than $1.4 trillion ($911 billion in active funds and $269 billion in passive funds) globally.

Simplicity managing director Sam Stubbs says with $4.8 billion in assets under management, Simplicity now has the scale to establish new international investment portfolios to be domiciled in New Zealand.

New Zealand domiciled funds are more tax-efficient because income earned on their overseas investments is subject to withholding tax at New Zealand tax treaty rates, optimising the amount of overseas withholding tax paid on this income. Stubbs estimates the gains will be around 0.3% which is the same as its management fee for shares and funds.

Research puts the long term tax drag for an investor on the top marginal tax rate investing in Australian equities at 0.8% to 2.3% per annum.