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Compare PIE fund rates

DepositRates.co.nz has compiled a table showing the rates on offer from the various PIE funds.

Friday, July 18th 2008, 12:12PM
Cash PIE funds are the perhaps the hottest investment around at the moment with many of the banks rolling out products in the past couple of months.

Depositrates.co.nz has compiled a table comparing the rates on offer both from call funds and also from ones which have a fixed term.

The table has the advertised rate, then the effective gross rate for 33% and 39% taxpayers. It also includes the minimum investment amounts which vary considerably . In addition to what is shown Forsyth Barr has higher rates for amounts of more than $20,000, $50,000 and $250,000.

Likewise Kiwibank are offering increased rates if no withdrawals are made.

We have expressed the effective rates as they are portrayed by the providers. However a point investors should be aware of is how the rate is compounded. There are three options; Compounding daily, monthly, or interest at maturity. Each changes the final amount. Also, while these funds are promoted as benefiting those on 33% and 39% tax rates there are also benefits for people on lower marginal rates.

"The PIE also increases the gross return for those on 30% and 19.5%," Direct Broking marketing manager Julian Grainger says. "Not much mind you; we're only talking a couple of basis points. But if you're a retiree every point counts."

He says a 19% taxpayer with $100,000 is likely to get around $50 extra annually.

Currently there are only two providers with fixed term products, ANZ-owned finance company UDC and Kiwibank.

UDC starts a new fund each month. Currently it is taking subscriptions for the fund which starts on August 1. The rates are shown in the table below.

It's worth noting the rates are lower than what it offered in the 12 month-term fund started a month earlier. The rates for that one were 8.90%, 9.29% and 10.21% respectively.

The rates published are compiled from each providers own information.

For a full comparison table, click here.

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