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Westpac latest cab off the cash PIE rank

Westpac has joined AMP/Rabobank in the cash PIE (portfolio investment entity) market with the launch of a new product run by its funds management subsidiary BT.

Friday, March 28th 2008, 5:34AM

by David Chaplin

The Westpac Cash Plus Trust was released through the bank's financial advice network two weeks ago and has already garnered "impressive" support, according to Patrick Middleton, head of Westpac Wealth.

Middleton said the Cash Plus fund is targeted at the 39% and 33% tax bracket investors who can take advantage of the PIE maximum tax rate of 30%, which becomes effective on April 1.

"The major benefit of a PIE fund is that income earned from the fund is taxed at an individual's Prescribed Investor Rate. Specifically, from 1 April 2008, investors who are on a 39% or a 33 % marginal tax rate will be taxed at 30% on their income from a PIE and will therefore enjoy a 9% or 3% gross tax saving respectively," he said in a statement.

Middleton said while investors can buy into the Cash Plus fund directly the bank encourages them to seek advice before investing in the product.

"Our advisers will carry out a needs analysis to see if the fund is right for investors," he said. "It's positioned at an investment time-frame of 180 days plus, which is longer than most term deposit investments."

Cash Plus has a minimum initial investment of $5,000 with further ongoing investments of at least $1,000 at any time. Westpac has also set the minimum withdrawal rate at $1,000 with no restriction on when the money can be taken out.

BT will invest the Cash Plus money in a range of New Zealand bank deposits and mortgage-backed securities - all with a credit rating of A1 or higher.

"It's just a little riskier than a cash account," Middleton said.

He said the Cash Plus product does not offer a headline interest rate with returns determined by the performance of the fund. According to the Cash Plus investment statement, the current management fee has been set at 0.5% of the gross value of the fund with a further .02% trustee fee.

AMP launched the first cash PIE, the Cash Advantage Fund, late last year, which invests directly into a Rabobank deposit. The Cash Advantage Fund is currently offering a return of 8.25%.

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 ▼2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.15 3.29 ▼3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
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China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
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Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac ▼3.39 3.45 ▼2.99 ▼3.35
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TSB Special 4.54 2.55 2.69 2.99
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Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.12 3.19 3.14

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