Focusing on funds management after-tax returns is set to become standard practice, according to a panel of industry experts at the Investment Technology Group (ITG) conference.
"When there is a lack of effective after-tax reporting, these advisers may not have the proper information to give their clients meaningful answers, much less be able to put them in the proper investment products in the first place," Vanguard Investments head of retail Robin Bowerman said.
The majority of fund managers presently report return as one total figure, without distinguishing between the capital growth and income components of the result. This composition can be critical to an investor's end-of-year tax position.
Knowing this level of detail is crucial in order for financial planners to give their clients the best possible advice.
"It has been noted that very often the tax costs to the investor are the largest negative impact on the actual return earned by them....the expectation of investors has surely now shifted to ensure that investment managers are...... aware of the tax implications of their decisions," Continuum Capital Management executive director Max Cappetta said.
After-tax returns represent a realistic picture of what an investor receives, and this is critical information in light of the current equity market conditions, ITG Asia Pacific product manager for market data Tania Castro said.
"This is 'real' money that investors will never see if they don't understand their tax circumstances and if managers do not appreciate the tax implications of their buy and sell decisions," she said.
