The introduction of MySuper could threaten a wider uptake of after-taxation investment strategies among superannuation funds, according to Russell Investments.
After-tax strategies come with an initial implementation cost and this could be seen as conflicting with the emphasis on the low-cost nature of MySuper.
"[MySuper] is not an opportunity; it is a risk," Russell Investments director of after-tax investment strategies Raewyn Williams said.
Williams said the danger was twofold.
"The first is that with MySuper there will be more of a focus on cost than net return and value, because the value proposition of after-tax investing is that you pay a bit more, but you get a lot more back," she said.
"So that is really jeopardised by what some people think might be the MySuper thinking about just being about low cost."
But there was also a danger they would shift to passive investment strategies for the wrong reasons, she said.
"Secondly, there is a pervasive myth, or simplification, that passive investing is a lot more tax effective than active investing. In practice it is not . the right response to simply say: 'Tax is all about turnover, therefore, go passive and keep turnover low and that is your after-tax solution,'" she said.
Williams will give a presentation on after-tax investment strategies for institutional investors at Russell's Australian Investment Summit to be held in Sydney tomorrow.
