Northern Trust provides tax transparent fund for Danish investors
16 May 2018 London
Image: Shutterstock
Institutional investors in Denmark now have access to Northern Trust Asset Management’s Common Contractual Fund (CCF) solutions, following a ruling by the Danish National Tax Board.
The CCF is a tax transparent structure which allows for the withholding tax rate of the investor, rather than the fund, to be applied.
According to Northern Trust Asset Management, its CCF range is complemented by sustainability and the cost efficiency of a passive approach to investing.
Confirmation of tax-transparency by local country tax authorities enables investors to obtain the same withholding tax rates as if they had invested directly in equities, with the added features of investing via a pooled fund.
Mamadou-Abou Sarr, director of product development and sustainable investing at Northern Trust Asset Management, said: “The ruling from the Danish National Tax Board will now allow institutional investors to take full advantage of the dual taxation treaties—and we believe this translates to greater return potential and opportunities to achieve enhanced performance.”
He added: “According to our research, based on data as of 31 October 2017, by investing in a CCF, a Danish pension fund investing in a world equity index fund could achieve an uplift of 20 to 50 basis points, depending on the strategy, compared to investing in a non-tax-transparent vehicle.”
“Institutional investors such as pension funds and insurance companies continue to grapple with regulatory change and face increasing demands to reduce bottom-line costs and improve top-line performance. Choosing the right investment vehicle is one way to achieve this and we are pleased to offer our range of tax-efficient CCFs to Danish investors.”
The CCF is a tax transparent structure which allows for the withholding tax rate of the investor, rather than the fund, to be applied.
According to Northern Trust Asset Management, its CCF range is complemented by sustainability and the cost efficiency of a passive approach to investing.
Confirmation of tax-transparency by local country tax authorities enables investors to obtain the same withholding tax rates as if they had invested directly in equities, with the added features of investing via a pooled fund.
Mamadou-Abou Sarr, director of product development and sustainable investing at Northern Trust Asset Management, said: “The ruling from the Danish National Tax Board will now allow institutional investors to take full advantage of the dual taxation treaties—and we believe this translates to greater return potential and opportunities to achieve enhanced performance.”
He added: “According to our research, based on data as of 31 October 2017, by investing in a CCF, a Danish pension fund investing in a world equity index fund could achieve an uplift of 20 to 50 basis points, depending on the strategy, compared to investing in a non-tax-transparent vehicle.”
“Institutional investors such as pension funds and insurance companies continue to grapple with regulatory change and face increasing demands to reduce bottom-line costs and improve top-line performance. Choosing the right investment vehicle is one way to achieve this and we are pleased to offer our range of tax-efficient CCFs to Danish investors.”
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