by David Chaplin
According to Malcolm Davie, First NZ Capital portfolio manager, the new Global Equity Fund, which was released on Monday as the PIE rules came into force, would invest into between six to eight underlying investment trusts at any one time.Davie said while the PIE regime, which could make UK listed investment trust less tax-effective for some direct investors, has created a demand for the new product "we've had the idea for some time".
He said many investors would still choose to buy UK listed trusts directly but the new PIE provided a "viable and cost-effective administrative solution" in the current tax environment.
"We're working through the list now [of which trusts to include in the fund]," Davie said.
He said the underlying trusts would be reviewed monthly and changed where deemed appropriate. Davie will work closely with Peter Irwin, First NZ head of UK investment trusts, on the composition of the Global Equity Fund.
The tax treatment of UK listed investment trusts was a contentious issue when the new rules were being drafted last year with several politicians, including Revenue Minister Peter Dunne, labeling the structures as tax-avoidance vehicles.
Earlier this year the New Zealand Investment Trust announced it would wind up despite receiving a two-year exemption from complying with the new tax rules.
As well, the Global Equity Fund will feature in First NZ's KiwiSaver product that includes its newly PIE-compliant Income and Alpha funds.
In a statement, First NZ Capital said it would also broaden the distribution of the Income and Alpha funds to the retail market. The group released its first retail unit trust in 2005 but limited its distribution to First NZ internal advisers and a few select external advisory groups.
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