Australia chastised for lack of true performance figures

The global chief executive of index manager Vanguard has admonished Australian fund managers for a culture of high fees and a lack of transparency in the reporting of performance figures.

In Australia last week where he established the group’s Melbourne office as Vanguard’s Asia-Pacific regional headquarters, Jack Brennan said average investors in Australia were missing out on the low fees afforded to larger investors.

Investors were also being denied the opportunity to compare investment returns on an after-tax basis, Brennan said.

Vanguard began reporting returns on an after-tax basis in Australia last year. In the US, the low-fee index manager spearheaded a push that ultimately led to after-tax reporting of performance being made mandatory by US legislators.

“We have been doing it [reporting after tax returns] in the States and we led the way in the States to the point were it became legislated,” Brennan said.

But Vanguard has ruled out pursuing legislative means to force other managers to report performance on an after-tax basis in Australia.

The group’s Australian managing director, Jeremy Duffield, said a better solution would be for investment researchers to compel fund managers to release information on after tax returns.

“I would be very satisfied if research houses did a good job providing advisers with that information. It’s advisers who need to know because they play the predominant role in advising retail clients in Australia,” Duffield said.