The Abacus-Alpha fund is an actively managed share fund that uses a range of different investment styles.
The manager of the fund, Malcolm Davie, says the firm launched the fund because sharebrokers will lose the advantage they have over managed funds when proposed tax changes are implemented.
Under those moves managed funds will no longer have to pay capital gains tax, rather they will operate under a flow through regime where unitholders are taxed at their own marginal tax rate.
“The looming tax changes are a threat to companies like ourselves,” Davie says.
The Abacus-Alpha fund is essentially an actively managed share fund that can use a variety of instruments to generate returns.
Davie says that it uses calls and options, installment receipts and stock lend as well as getting involved in takeovers. Besides using this variety of tools it also uses some more traditional techniques such as investing in yield stocks.
“The philosophy behind Abacus-Alpha reflects the belief that many existing investment vehicles serve the investing public poorly. High base fees charged irrespective of investment returns, inflexible investment mandates and a relative style which means low quality investments are often held solely because they represent a large percentage of a predetermined investment index such as the NZSX50,” First New Zealand says.
“With these shortcomings in mind Abacus-Alpha seeks to create an improved investment template for investors.”
Davie says balanced portfolios should have these sort of funds as part of their investment mix.
He says the fund started trading in October last year and generated returns of 18% since then. He wouldn’t disclose any of the fund’s current positions, but did say it had been involved in the Ports of Auckland takeover.
The fund originally started as something FNZC advisers used in individually managed accounts, but it has been made into a fund now and is on some of the platforms, including First New Zealand’s Asset Watch.
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