Second new investment company unveiled

The Colville listed investment trust, which was rolled out to the market yesterday, is one of the first IPOs to be promoted directly through financial planners.

Tuesday, May 11th 2004, 12:04AM

In the past IPOs have been available through financial planners however they have had to source the offer from a broker and share the commission – often with the planner complaining the split was unfair.

Colville executive director Brian Gaynor says

Colville is the second listed investment company to come to the market this year, but not the last. Another one, Salvus, is unveiling its offering this afternoon.

Gaynor says some of the key points that differentiate Colville are that it is aiming to be a low-cost option for investing in the New Zealand sharemarket, it aims to be highly transparent and it has what he describes as a unique management contract.

There are no performance based fees, unlike most other listed investment companies, and the management contract with Milford Asset Management is for just three years.

Gaynor doesn’t like the way management contracts for other listed investment companies run for up to 25 years.

Milford Asset Management, who are contracted to manage the fund will be paid an annual fee of one per cent, which Gaynor describes as being considerably lower than what managed funds charge.

Colville varies from the recently-listed Kingfish Fund in its tax structure. Kingfish is planning to run two portfolios – one active (taxed) and the other passive.

Gaynor says Colville will be an active vehicle and will pay tax.

Colville is aiming to raise $50 million with provision for another $25 million. Investors will be granted one option for every two shares held exercisable in March 2006.

It will take a “research driven” approach to investing and will focus on New Zealand and overseas entities listed on NZX’s markets, unlisted entities intending to list on these markets within 24 months, and ASX-listed entities in the S&P/ASX 200 Index. The fund will be style neutral.

The long-term investment performance target for the portfolio is to outperform the NZSX All Gross Index by at least 3% annually over time. It has chosen this index as the index is representative of the whole market. Gaynor says the index has done around 13.1% annually recently.

Gaynor says the fund is designed to people who want to invest in shares but don’t have the time to do it. Also these people are likely to have quite a bit of property and to be uncomfortable with managed funds.

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