New NZX product aimed at financial planners

NZX chief executive Mark Weldon says while some financial planners are more interested in clipping high cost tickets than providing low cost products, he is expecting a good level of interest in a family of exchange traded funds the NZX has launched under the 'Smartshares' brand.

“There is a wide range of financial planners out there, but we are not expecting to see some of the names you would expect to jump up and down on this,” Weldon says.

Many share brokers, on the other hand, had shifted from a defensive attitude to one of how they could utilise the new product to grow their businesses, he says.

For those that are keen NZX markets development manager and NZXFM director Geoff Brown says there will be plenty of information to round out financial planners’ knowledge of the new trading opportunities.

Under the new initiative, the NZX has taken over the operation and management of the NZ MidCap Index Fund (MIDZ), an exchange traded fund, from ABN AMRO Craigs Limited.

It has also agreed to acquire the rights to the NZX Australian MidCap Index Fund (MOZY).

MIDZ and MOZY join the NZSX 10 Fund (TENZ) in the Smartshares family, which will be controlled by a wholly owned subsidiary of the NZX, called the NZFM.

The NZXFM also intends to launch a fund tracking the NZSX 50 Portfolio Index, called FONZ, later in the year.

"We want to provide an easier, smarter and lower risk way for all New Zealanders to invest in the sharemarket," Weldon says. "Smartshares offer the opportunity for New Zealanders to invest in a diverse range of companies with a single trade, paying lower fees, and with all the other benefits of owning shares."

Weldon says while exchange traded funds, more commonly known as ETFs, were an excellent first investment for people new to the sharemarket, they could just as easily form a solid core to any investor's existing portfolio because they spread an investment across a whole index with just one trade. The popularity of ETFs has been growing rapidly worldwide, with the amount of money invested in ETFs increasing by 80% a year over the past seven years, he says. In the US, there are over 130 ETFs in existence accounting for over US$178 billion of funds under management.

Brown says Smartshares' management fees were comparatively very low at under 0.75%.

"The cost-effective nature of Smartshares, together with a binding ruling from the IRD meaning the funds do not pay tax on gains from the sale of shares, make these products a great investment for New Zealanders who want a simple and inexpensive way to invest in a range of companies at once," he said.

ETFs give returns that closely match those of an index because they hold shares in proportion to the shares in the index. They are bought and sold on an exchange in the same way as normal shares.

MIDZ has changed its name from the NZ MidCap Index Fund to the NZSX MidCap Index Fund from August 10.

A new website will support the Smartshares products (www.smartshares.nzx.com).

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