Increasing industry competition and a secular shift to passive strategies is bringing into sharp focus the value for money that asset managers bring to their clients.

In this environment, how can managers differentiate themselves, or generate greater returns without going outside of their strategy remit? The answer is, by eradicating unnecessary cost leakage and optimising returns.

In the UK, global equity allocations now represent 61 per cent of total equity allocations by domestic pension funds, according to the Pensions Protection Fund’s 2017 Purple Book. But despite the demand for these strategies, many structures that are offered by managers do not provide tax-efficient access for their tax exempt clients.

Such tax opaque structures lead to the dividends generated by global equity investments being subject to withholding taxes at a rate applicable to the fund, rather than a rate applicable to individual investors.

This means that tax exempt investors around the world may be paying unnecessary tax on dividends when investing in global equities via a tax opaque pooled fund, which is impacting returns from these strategies by as much as 20-40 basis points[1].

Unlocking returns

The Common Contractual Fund (‘CCF’) is an Irish, regulated, tax transparent fund structure. CCFs have been widely recognised by the industry as an efficient way for tax exempt investors, such as pension schemes, to utilise their tax exempt status when investing in global equity strategies.