by Rob Hosking
The Regular Income Fund (RIF) that is being launched on October 3, will aim to provide quarterly income at around 1% above the 90-day bank bill rate.
“It will be investing in similar asset base as the Diversified Yield Fund but with a greater emphasis on income than on growth,” says ING’s general manager marketing Stephen Giannoulis.
“It will sit somewhere between debentures and term deposits.” The fund is “a slightly higher risk product than a standard domestic fixed interest unit trust,” he says.
The RIF will invest predominantly in collateralised debt obligations (CDOs) and the targeted average credit rating those CDOs is a Moody’s/Standard & Poor’s rating of BBB.
It will also include investments in bank bills, bonds, commercial paper, mortgages, loans cash and the rest of the range of fixed and floating securities or deposits issued by financial organisations.
“The fund’s main exposure is credit risk, which is dependent on the performance of the underlying companies.”
There is a tax advantage for New Zealand investors in that it operates through an Australian domiciled unit trust and income earned by the fund outside Australia does not pay tax in Australia if it is distributed outside that country. Investors can also make regular withdrawals.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
| « Govt Super Fund earns 11.3% | Sovereign takes regulation bull by the horns » |
Special Offers
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved