Macquarie kicks off Aussie equities index fund
Macquariehas launched an Australian equities product as part of its True Index product range.
The Macquarie True Index Plus Australian Equities Fund, which is structured as a unit trust and valued daily, aims to deliver 10 basis points above the index per annum with no management fees.
Macquarie head of investment research Phil Dolan says the product compares favourably with what a traditional index manager has to offer.
“With a traditional index fund manager, you get possible above-index returns and you pay a fee. True Index Plus gives you certain above-index returns for no fee,” he says.
Macquarie’s True Index range was initially launched in 1997 and now includes Australian equities, property securities, Australian fixed interest and global fixed interest.
The range of True Index trusts has provided investors with exact index returns for no fund manager fees, with Macquarie retaining any outperformance for itself. Macquarie also pays for any underperformance of the index.
“Our product line makes a powerful statement about our confidence in our ability to outperform the index,” Dolan says.
Dolan says the outlook for traditional index managers going forward is that they will perform below index after fees.
While the average index fund returned 0.08 per cent per annum above the benchmark before fees in the five years to December last year, this fell to negative 0.07 per cent per annum after adjusting for the Telstra 1 and 2 offerings and index recompositions.
The new Australian equities product is at this stage available only to the institutional market, but Macquarie is considering offering a retail version. However to do this, it must overcome the challenge of being able to offer 10 basis points above the index and as well as no fees for the retail environment.
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