Tax implications for for PAC&GQG compared to PNI &MFG. PAC....

Tax implications for for PAC&GQG compared to PNI &MFG.


PAC. Australian listed company invests capital predominantly in US companies earns dividends after tax and pays tax again in AUS after overheads. Thus leaving it less to reinvest and lower ROC or ROE.

In the case of PNI predominately investing in AUS fund managers and only paying tax once.

If both PAC and PNI invest equal % of retained profits with equal success PNI will grow at a fast pace and thus always deserve a higher PE ratio.

Comparing GQG to MFG. They are different to the above comparison because they basically invest in listed companies and their earning come from fees charged as per FUM.

Here we have a similar problem as PAC compared to PNI. GQG being a US company pays tax on earnings in the US then pays approx 95% of earning in dividends to AUS citizens and we pay any tax due on that according to your circumstances.

In the case of MFG being an AUS company it pays tax here then distributes 95% in dividends we pay tax on those dividends but have a franking credit offset or in the case of pension mode super funds a total refund.

My point is if both companies were growing FUM at the same pace (which I will concede they aren’t at the moment) MFG would be a better investment if both were trading on the same PE. Alternatively MFG would deserve a higher multiple


Cheers Greg.