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Funds flow offshore holds up

Funds flows into tax effective OEICs and Australian based funds has held up well in the September quarter.

Thursday, November 8th 2001, 7:05AM

The latest Good Returns' survey of tax-effective offshore funds shows that funds flow into UK-based Open-Ended Investment Companies held up well in the September quarter compared to the rest of the industry.

Net funds flow (applications minus redemptions) for the quarter was $24.3 mill, exactly the same figure as it was in June quarter.

While funds flow was positive the total amount of money invested in the sector took a hit from poor fund performance with net assets under management growing just 8% to $86.3 mill in the quarter.

These figures compare well with a very flat quarter for mainstream managed fund sector.

According to researchers FundSource the New Zealand domiciled funds had net funds flows of $69.1 mill, which made it the worst quarter for the industry since June 1998.

It says the September quarter figures was down 81% on the $354 mill figure recorded for the previous quarter this year.

The second part of the Good Returns' survey covers money invested into tax-effective Australian-based funds.

There are three confirmed funds in this area, including Money Managers First Step Mortgage fund, which is run by NZ Funds Management, and two Frank Russell Funds (international shares and international bonds) which are market as ANZ's Ascent investment programme.

First Step continued to attract significant volumes of new investment, with a net funds flow of $39 mill, taking it to $219 mill net assets under management.

Although there are only three funds included in this part of the survey, it is understood that other Australian based funds are being operated by managers, and quite a few managers are looking at establishing funds offshore to get around issues of paying tax on capital gains.

Although there are concerns that these funds could lose their tax-advantage if the Government adopts the risk free return model (RFRM) advocated by the McLoed tax review, that is unlikely to happen soon.

Finance minister Michael Cullen says the biggest problem with introducing RFRM lies with offshore investments.

Under such a scheme investors would have to pay tax on the amount of money they have invested at the start of the year no matter what happens during the year.

This means that in a situation where markets are declining in value investors would be paying tax although their funds are making losses.

« Managers stopped from using loopholeSovereign takes regulation bull by the horns »

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Lender Flt 1yr 2yr 3yr
ANZ 6.24 5.10 5.25 5.59
ANZ Special - 4.69 4.89 -
ASB Bank 6.50 5.05 5.25 5.35
ASB Bank Special - 4.69 4.89 4.99
BankDirect 6.50 5.05 5.25 5.35
BankDirect Special - 4.69 4.89 4.99
BNZ - Mortgage One 6.65 - - -
BNZ - Rapid Repay 6.24 - - -
BNZ - Special - 4.69 4.69 -
BNZ - Std, FlyBuys 6.24 5.09 5.09 5.19
BNZ - TotalMoney 5.99 - - -
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.45 5.75 5.75 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct 6.10 6.45 6.69 7.10
First Credit Union 5.85 - - -
HBS Bank 6.14 5.39 5.39 5.39
HBS Special - 4.69 4.69 4.99
Heartland 6.70 7.00 7.25 7.85
Heretaunga Building Society 6.45 5.10 5.40 -
Housing NZ Corp 6.49 5.19 5.49 5.59
Lender Flt 1yr 2yr 3yr
HSBC Premier 6.60 4.89 4.89 4.99
HSBC Premier LVR > 80% - - - -
HSBC Special - 4.49 4.49 4.49
ICBC 6.75 5.99 6.39 -
Kiwibank 6.15 4.79 5.49 5.69
Kiwibank - Capped - - - -
Kiwibank - Offset 6.40 - - -
Kiwibank Special - 5.09 4.65 4.99
Liberty - - - -
Napier Building Society 6.50 5.80 6.70 -
Nelson Building Society 6.70 5.65 5.95 -
Lender Flt 1yr 2yr 3yr
NZ Home Loans 6.60 5.39 5.49 6.29
Perpetual Trust 7.70 - - -
Resimac 5.59 5.37 5.40 5.52
SBS Bank 6.14 5.39 5.39 5.39
SBS Bank Special - 4.69 4.69 4.99
Sovereign 6.35 5.05 5.25 5.35
Sovereign Special - 4.69 4.89 4.99
The Co-operative Bank 6.20 4.69 4.79 4.99
TSB Bank 6.24 5.10 5.39 5.45
TSB Special - 4.69 4.69 4.99
Wairarapa Building Society 6.20 5.75 5.95 -
Lender Flt 1yr 2yr 3yr
Westpac 6.15 4.99 5.19 5.19
Westpac - Capped rates - 6.15 6.15 -
Westpac - Offset 6.15 - - -
Westpac Special - - 4.69 -
Median 6.40 5.09 5.25 5.35

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