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First NZ Capital taps demand for yield with new PIE fund

First NZ Capital Group's investment management unit has launched its first bond fund in a PIE structure, taking advantage of demand for yields offered by well-rated corporates.

Monday, 11 May 2009

by Paul McBeth

The First NZ Capital NZ Bond Fund has grown 1.5% to $18.1 million since it was first invested two months. The average credit rating on securities in the fund will be A-, said chief operating officer Jody Kaye.

"This will be the flagship" fund, Kaye said. It is targeted at clients and advisers looking to invest in a diverse range of quality fixed interest securities.

Investors have snapped up company debt offerings as returns offered on term deposits and saving accounts have dwindled. The current unit price for the fund is $1.0077, with a running yield of 8.06%. Over 23% of its current holdings are in ASB AA rated bonds. Its third-largest holding is 8.1% in a Fonterra issue.

Kaye said the fund will focus on investment grade bonds. Any potential investments outside these parameters require the approval of the investment committee, and would have to be high calibre offerings from strong issuers, such as Fletcher Building, he said.

First NZ Capital currently operates four funds, but this is its first that will utilise a PIE structure. Kaye said the investment manager plans to be more active in the market, but has no other offerings in the pipeline.

Kaye said the fund will be priced daily with quarterly distributions.




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Cash PIE Rates
Institution Rate 30% 33%
ANZ 0.10 0.10 0.11
ASB Bank 0.40 0.41 0.42
ASB Bank 0.55 0.59 0.56
ASB Bank 0.60 0.61 0.64
ASB Bank 0.65 0.66 0.69
ASB Bank 0.70 0.72 0.75
BNZ 0.10 0.10 0.10
Heartland Bank 2.25 2.59 2.70
Kiwibank 0.75 0.77 0.88
Kiwibank 1.75 1.81 1.89
Nelson Building Society 3.75 3.90 4.08
RaboDirect 1.50 1.55 1.62
SBS Bank 1.80 1.86 1.94
TSB Bank 1.60 1.64 1.71
Westpac 0.35 0.36 0.38
Westpac 0.05 0.05 0.05
Westpac 2.60 2.67 2.79

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