Non-government school industry fund NGS Super has adopted an Association of Superannuation Funds of Australia (ASFA)-backed after-tax benchmark to measure the investment performance of its $1.3-billion Australian equities portfolio.

The fund adopted the FTSE ASFA Australia 200 - Superannuation Index from the FTSE ASFA Australia Index Series.
 
The index applies the income tax rate for superannuation funds and includes the effects of franking credits and off-market buybacks to help manage the portfolio in a tax-effective manner.

The index will be applied to nine fund managers and their corresponding custodians.
 
"Tax can be a significant drag on returns," NGS Super investment counsel Tim Hughes said.

"Our goal is to maximise after-tax performance, not to minimise tax. Using the FTSE ASFA benchmark encourages our managers to recognise that tax is a real consideration for our members, while not overly complicating the tax issue."

FTSE Group Australia director Julie Andrews said the company had been working closely with NGS Super over the past year to support its transition to after-tax benchmarking.

"Not only will the FTSE ASFA after-tax benchmark assist NGS Super's measurement of tax effectiveness, it will also enable their members to compare investment performance on an after-tax basis, which is essential for the industry to become more transparent," Andrews said.

ASFA chief executive Pauline Vamos said it was unsurprising that more funds had started benchmarking themselves against the after-tax benchmarks.

"The need to account to fund members on true performance has never been more important in this time of market uncertainty," Vamos said.

"The industry continually shows that it has an appetite to move before what will likely be a legislative requirement to actively assess after-tax performance."