All strategies work – until they don’t. While the hottest ticket in town is still private credit, is it everything it’s cracked up to be?
In Cliff Asness’ latest missive, a fictional asset allocator from the future looks back on the decade to 2035 to figure out which assets helped their performance and which hurt it.
Parametric builds out after-tax product range
(Pictured: Ross Chapin)
Parametric Portfolio Associates, the after-tax and implementation-efficiency manager, is to introduce a range of index funds in Australia as well as its global emerging markets capability as it prepares, also, to enter the high-net-worth market.
On a regular visit to Australia last week, Ross Chapin, a managing director and head of strategy, said the “systematic alpha” – or smart beta – funds would make it easier for Australian clients to take the first step towards better after-tax management. “They won’t need to go the whole way by having CPM (centralised portfolio management). They are already using or expanding their low-cost beta exposures. We aim to deliver an extra 25bps for them,” Chapin said.
Chris Briant, Australian country head, said there was increasing interest in the CPM product, which Parametric has concentrated on to date, especially with asset consultants. Apart from netting off trades from underlying managers to minimize capital gains and other taxes, CPM rationalises the cash and FX accounts to dramatically reduce the number of trades and provide further savings for clients. Execution is done through panels of brokers and banks on an agency basis.
Briant also confirmed an entry to the top end of the Australian retail market, perhaps from later this year. Because wealthier people are on high income tax brackets, the after-tax management of their portfolios offers greater savings than other investors, including super fund investors. Parametric has about US$30 billion in after-tax strategies by HNWs in the US.
“We absolutely have plans for the HNW market here. Our model is to do this through a major platform – not directly – as we have done in the US,” Briant said.
Chapin attended the CMSF conference on the Gold Coast last week along with Briant and Raewyn Williams Parametric’s director of research. Parametric last month appointed Whitlam Zhang as a senior analyst. Like Williams, he is a former Russell Investments consultant.
Chapin said that a reason for super funds looking more closely at after-tax strategies was that they had become more willing to “take on active-manager opposition” to change, especially since the global financial crisis and having bedded down all the regulatory changes, such as MySuper. MySuper had also increased interest in various indexing strategies.
