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The bank yesterday launched two non-taxed specialist investment funds designed specifically for charities.
The ASB Bank Charities Income Trust and Growth Trust are designed to help mid-sized charities earn greater income and protect the real value of their capital over time, managing director Ralph Norris says.
Other fund managers have ventured into the market with trusts specifically designed for charities, but not all have been successful.
Joseph Banks (now Colonial) and Trustees Executors launched funds a number years back but have now retreated from the area.
The main player operating in this area is AMP Asset Management which launched a series of specialists trusts for charities last year.
ASB Bank manager wholesale business markets, Richard Flinn believes there are three reasons why ASB will be successful.
Firstly, it has a captive client base as a large number of charities bank with ASB.
Flinn says the point New Zealand is at in the economic cycle is also a plus for these products.
Term deposits have been the default investment option for many charities, however with a low interest rate environment and growing demands on charities to make grants there is a need to look at other investments to generate better returns.
The third reason is simply a demand for suitable products.
"Feedback received by ASB Bank indicated that the market needed investment products that acknowledged the tax-free status of charities and community organisations," Norris says.
The income trust invests in 90 day bills, Government stock, high quality corporate debt and fully hedged international bonds. ASB Bank's Treasury division will manage the fund and it will track various fixed interest indices.
The growth trust invests in two AMP Investments index funds - Tracker for New Zealand shares, and WiNZ for international equities.
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