Weekly briefs

New trust feature, Tower puts a lid on fund, Good look for managed funds.

Monday, August 24th 1998, 12:00AM

This week Good Returns starts a new series of articles on trusts written by New Zealand Guardian Trust business development manager Mark Cassidy.
The series will describe how to use trusts, plus it will detail all the latest changes to trust law.
Cassidy says that more and more New Zealanders are using trusts and it is important that both investors and advisers keep up to date with developments in trust laws.
This series will be essential reading for people with existing trusts or those looking to set one up.

The first article in this series can be found in Good Returns' features section. A new article will be added every three weeks.

Tower puts a lid on
An investor (mini) stampede to safety has prompted Tower Trust Services to change the rules for its MortgagePlus Income fund.
Tower is limiting all new investments into the fund to a maximum of $50,000 so the fund doesn't get too large. One of the problems facing the company is that if too much money comes in the door it won't be able to fully invest the fund in mortgages.
Also the fund, which was repackaged recently, has been made too attractive. It is offering a guaranteed minimum rate of 8.5 per cent for the three months to September 31, and it has no lock in period. The guaranteed rate is higher than cash at present so investors can use it as a proxy vehicle for short term investments.
Tower's problem is that there is a mismatch between the liquidity available to investors and the relative illiquidity of mortgages.
Managing director Jim Minto says "it is our duty to manage MortgagePlus as going concern and protect the interests of the current investors, by either limiting or declining investments altogether. In this light we have chosen to limit investments."
Investors wanting to invest sums of more than $50,000 are being encouraged to use the Trustees Executors Mortgage Fund which has a minimum guaranteed rate of 8.55 per cent, for the three months to September 30, with a 1 year lock-in period.

A good look for managed funds
An ASB Bank-sponsored survey of investment confidence has shown managed funds in a good light, however with dubious company.
The survey puts managed funds on par with residential rental property investment for giving the best returns.
They were followed reasonably closely by term deposits then listed shares.

Managed funds	18%
Residential rental property	18
Term deposits	13
Listed shares	10
Bank savings accounts	6
Commercial property	6
Insurance products	6
Fixed interest/Govt stock	6

ASB Bank investment services chief manager Roger Perry says he was pleasantly surprised by the survey results, as he expected residential rental property to rank more highly than managed funds.
He says when the results were broken down further it showed that people in the top half of the North Island ranked residential property ahead of managed funds, however that finding was reversed in the South Island.

« Australian unit trust tax changes

Get your tax questions answered online »

Special Offers

Weekly briefs

New trust feature, Tower puts a lid on fund, Good look for managed funds.

Monday, August 24th 1998, 12:00AM

Commenting is closed

www.GoodReturns.co.nz