South Africa's investment and asset management industry needs to be more transparent in reporting investment performance to the investing public, according to Sam Camilleri, chief executive of Gryphon Asset Management.
“The industry has never seriously debated or questioned the appropriateness of reporting performance on a pre-tax basis,” he said.
“Investment performance, return on investment and performance tables are all based on gross figures. However, it is the net return on investment which is of real consequence to the investing public.”
Camelleri pointed out that, in an attempt to benchmark their own returns, pension funds worldwide are starting to put pressure on their investment managers to report performances on an after-tax and fee basis. “We believe the same thing will happen in South Africa,” he added.
Camelleri explained that trustees have the responsibility of clearly defining the investment mandate of their retirement funds. “If after-tax reporting is accepted as the norm, the wisdom of many asset consultants will be questioned by fund managers about their advice to trustees of pension funds to move from the traditional balanced fund manager to specialist managers,” he said.
“I suggest ultimately clients would like to achieve the highest possible ‘net returns’ and to achieve this objective tax management will have to play a bigger role in the life of their investment managers.”
By Janet Du Chenne
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